Scams Even You Could Fall For—And How to Avoid Them

Learn how to avoid the most common swindles—from high-tech password theft to low-tech door-to-door hustles. 

Counterfeit-Check Fraud

The rip-off: This crime comes in many forms, but each takes advantage of a shocking loophole in the banking system—namely, that when you deposit a check, the funds are quickly made available in your account before the check officially clears. For example, swindlers make a deposit on an apartment lease with a counterfeit check, then ask the owner to return the funds immediately; the owner is now out that money twice over.

The tip-off: “If somebody sends you a check and then asks you to wire money back to them, it’s absolutely a scam,” says John Breyault, vice president of public policy for the National Consumers League, a nonprofit consumer-protection organization, which identified fake checks as the top scam in 2009 based upon complaints the group received. Shawn Mosch, 39, of Bloomington, Minnesota, started the advocacy group Scam Victims United with her husband, Jeff, after they fell for this scheme. They were selling an old Buick, and the buyer told them a friend owed him money and would send them a cashier’s check directly. When it arrived, it was made out for $7,000 more than the agreed-upon price, so the Mosches wired the difference to the buyer after they assumed the check had cleared. “I thought I had asked the bank the right questions: Is the check good? Has it cleared? Is it verified? And they told me yes to every question,” Shawn said.

How to protect yourself:  “This scam preys on people’s unfamiliarity with the check-clearing process,” says Breyault. (That includes your own bank’s employees.) When you deposit a check into your account, even though the funds show up, that doesn’t mean that it is valid. Until it clears the issuing bank, a process that can take up to a couple of weeks, you don’t really have the money. So never spend the funds you have deposited or return the money until the check is fully processed. To find out a check’s status, call your bank twice (talk to two different workers in case one doesn’t understand the process) to verify that the check has been fully processed. Otherwise you lose the money if the check is a fake.