In a world where much of consumer banking has gone high-tech, the most costly scams involve an old-school tool: checks.
At about $2,000 a pop, fake-check scams cheated consumers out of more than $28 million in 2019, according to the Federal Trade Commission. That per-instance amount is more than six times the median loss on all frauds tracked by the agency.
"Fake checks are a tactic used with a range of story lines," said Emma Fletcher, a program analyst with the FTC's division of consumer response and operations. "But there are always two common elements — there's always a check that you have to deposit and a plausible explanation for why you must part with some of it."
Fake-check scams are up 65% since 2015, according to the FTC. And they are hitting younger adults the hardest: Last year, 20-somethings were more than twice as likely as people 30 and older to report losing money in fake-check scam.
"Part of that is we're seeing scammers specifically target college students," Fletcher said. "They get an email that looks like it's from a professor, or career services, and they think it's been vetted.
"They might not have the skepticism they'd have otherwise."
The scams basically involve you agreeing to deposit a check in your bank account and then, once the funds are available — usually within a day or two — sending a portion of it to another person (or company) via wire, gift cards, etc.
It's only after that point when the scam becomes apparent: The bank discovers the check was fake and reverses the deposit — but you've already sent the amount from your account that you were instructed to. So not only are the check's funds gone, so is the money you gave to the scammer.
"Banks are required to make those checks available quickly, but it often can take weeks to spot a bad check," Fletcher said.
"A consumer might have doubts, but then when they see the money in their account they trust it's really there," she said. "People never think they're then sending money to a scammer."
Here's an example: Say you see an opportunity to to make some extra money by getting your car wrapped with advertising. You inquire and are sent, say, a $1,000 check. While $400 is for your services, you're told, you have to send the other $600 to the wrap installer.
Or, you could sell something online and the buyer "accidentally" gives you a check for more than the amount. They tell you where you can send the difference.
In 2019, about 50% of reported fake-check scams involved a job offer, according to the FTC. Another 18% were from a victim selling something online.
Additionally, these scams can involve any type of fake check made to look legitimate: personal or business, cashier's check, money order or even electronic check.
"Scammers are all about building trust and getting you to do something you wouldn't do unless you trusted that person," Fletcher said. "They have really clever story lines."
The easiest way to avoid being a victim is to never accept a check from someone you don't know.
"If someone you've never met gives you a check to deposit and says you can't keep all the money — no matter what the reason is — that's a huge red flag," Fletcher said. "Those are scams."
Consumers are encouraged to report any type of scam to the FTC.