Greg's Corner

Here’s why the phony check scam works

Probably, the most common scam we’ve discussed is the phony check scam. It seems like it’s at the heart of almost every other online scam. At the heart of the scam is, of course, the phony check. Scammers will send you a [phony check for any number of reasons but the hook is always the same. They’ll send you a check for more money than you were asking for or were expecting. They’ll instruct you to deposit the check and then send them the difference. By the time the bank discovers that the check is a fake, you’re responsible for the entire amount of the check while the scammers disappear with your money.

It all seems rather unfair. You’re the victim of a scam after all. So why does this particualr scam lend itself so well to scammers? According to Vox, it all has to do with the way cashier’s checks are handled by banks. Legitimate cashier’s checks are just as good as cash where your bank is concerned. The person or entity who is issuing the cashier’s check pays the bank the full amount for that check to be issued. So when a bank receives a cashier’s check as a deposit they’re operating under the assumption that the check is legitimate and the funds should be immediately available.

The bank only usually discovers that the check is fake after it’s been deposited and returns as a fraudulent check. Unfortunately, the only person the bank can hold responsible is the person who deposited the check which in this case is the scam victim. While many people realize that the checks they receive are fake, there are enough people who fall for this scam that they keep the scammers in business. Billions of dollars in fraudulent checks are attempted to be cashed each year. However, you can protect yourself by avoiding these situations. If a deal feels like it’s wrong, it probably is.