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FDIC Consumer News - Summer 2002
Bogus "Bonus" Checks
We have warned readers about unsolicited offers of a job, a reward or some similar "opportunity" that are scams to convince people to send cash or give out valuable personal information. Now we want to tell you about a new wrinkle involving bogus checks that are costing victims big bucks.
Here's how it works: You say "yes" to a phone, mail or Internet offer, for which you are to receive an advance payment as a bonus. But when the check arrives, it's for an amount much larger than what you were expecting, and you are instructed to deposit the check and wire the excess to a third party. You follow the instructions and, weeks later, your bank discovers that the check is fraudulent. The result: The money you transferred from your account is gone and, depending on the circumstances, you may be liable for all of the money deposited, even if it's far beyond what you have in your account.
For example, consumers who accepted jobs that came with a $2,000 "signing bonus" received checks ranging from $19,000 to $50,000 with instructions to keep $2,000 but wire the rest to Europe. Some consumers who complied had to repay the entire amount wired from their own accounts, plus the remainder of the original deposit. In some cases, banks lost money when customers were unable to cover the fraudulent checks.
Words of wisdom: Be skeptical of unsolicited offers that involve up-front payments, sound too good to be true, or otherwise don't make sense. "No legitimate company is going to send you an extremely large check and say, 'take out what we owe you and send the rest back,'" explains Karen Currie, an FDIC fraud investigator. She adds that if you detect any pressure to send a payment fast, that should raise red flags. "Speed is essential to pulling off a fraud with counterfeit checks," Currie says. "The idea is to get you to wire money from your account before your bank realizes that the check you deposited is bogus."
Fake Cashier's Checks
"First, insist on a cashier's check drawn on a local bank or a bank that has a local branch," says FDIC fraud investigator Gene Seitz. "That way you can take the check to that bank to ensure it's valid." If you can't get a cashier's check from a bank with a local office, Seitz says, confirm that the out-of-town cashier's check is good by calling the bank.
Use the phone number from a reliable source, such as directory assistance. "Don't depend on the phone number given to you by the buyer," he warns, "because if this is a fraud, that phone number could just put you in touch with a partner in crime." If you're not sure where the bank is located or if it is legitimate, check the FDIC's "Institution Directory" on the Internet at www2.fdic.gov/idasp.
Be comfortable that you're dealing with an honest person. "Start by verifying the name, address, home number and work number of the purchaser through some independent means, such as an Internet database or directory assistance," he says. "Trying to determine who this person is will be especially important if you're selling over the Internet, because you're taking a big chance that the buyer could be a thief." Finally, Seitz cautions, hold on to the merchandise for several days after you deposit the cashier's check, or even longer. "To be safe, you may want to wait a couple of weeks before releasing the merchandise if you have suspicions about the buyer or the check," he says. "That's how long it could take for your bank to discover if the cashier's check is phony, and if it is, the bank will come looking to you for the money."
Law enforcement authorities report that thieves are taking cash from automated teller machines by inserting high-tech "skimming" devices that read customer account numbers later used in making counterfeit cards. While federal law limits your liability for unauthorized ATM withdrawals from your account, you should take some precautions. The Florida Department of Banking and Finance in July offered these tips: When using an ATM, be suspicious of anything that seems unusual, such as odd-looking equipment or wires attached to the machine, or a jammed machine that forces you to use another ATM (where there may be a skimmer attached). Also be sure to check your bank accounts regularly to make sure there are no unusual or unauthorized transactions.
For solid advice about preventing or reporting any type of identity theft, check out the U.S. government's central Web site on this crime at www.consumer.gov/idtheft. It includes a new affidavit to simplify the process of disputing fraudulent debts and accounts opened by an identity thief. The affidavit was developed by the Federal Trade Commission in conjunction with consumer groups, industry organizations and the law enforcement community.
Card Cops, a fraud prevention group, has added to its www.cardcops.com Web site a free service that may alert you to the possibility that your credit card number is about to be used for fraudulent purposes. Card Cops has developed a database of more than 100,000 credit card numbers collected from "chat rooms" and other public areas of the Internet frequented by credit card thieves. You can see if your card number shows up in the database and, if it does, alert your financial institutions. (Note: Our mention of this private service is not an endorsement by the FDIC.)
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