February 23, 2017

 What everyone needs to know about fake check frauds – and should tell their friends

There are a large number of frauds that depend on the use of counterfeit checks.  The National Consumers League recently reported that the number of complaints they got in 2015 was up dramatically.   Many of us assume that if we deposit a check, especially a cashier’s check, and the bank puts the funds into our account, this means that the check is good.

But it does not.  Only when the check works its way back to the bank it is drawn upon does anyone realize that it is counterfeit.  At that point the bank will remove deposited funds back out of our account, and hold us responsible even if we no longer have the money.  Some victims have even been arrested for passing bad checks.

Two things everyone needs to know

  1. Having the funds credited to my bank account does not mean that the check is valid.

Federal banking rules require banks to allow the use of deposited funds right away.  Thus          when I deposit a check the bank is required to put the money into my account right away    – within a day or two.  But the bank also has the right to recover the money from me if      the check is counterfeit.

  1. Cashier’s checks and Postal money orders can be forged as well. A cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds and signed by a cashier.  Cashier’s checks are treated as guaranteed funds because the bank itself, rather than individual with an account at that bank, is responsible for paying the amount. These are commonly required for real estate and brokerage transactions.  If I deposit a cashier’s check the bank must credit my account by the next day.   But again, it is only when the check works its way back to the bank that issued the check that I learn it is counterfeit.  The same holds true for Postal Money orders.

So how does the fraud get money from victims?

Fraudsters understand exactly how this system works.  The frauds always want victims to verify that the money from the fake check has been credited to their bank account.  Then the fraudsters ask the victim to send the funds to a supposed third party through Western Union or MoneyGram before the check bounces.   More recently some victims have been asked to withdraw cash and deposit it into a bank account opened by the fraudster in the local branch of a bank that operates nationally or internationally.  I explain several of the most common frauds using this approach below.

Click here to read the full article

Frauds on Immigrants

For some years the frauds have also been contacting recent immigrants, impersonating government agencies and threatening to deport people if they do not pay immediately.  From what I’d seem previously it appears that these calls were actually coming from India.  But with immigration now very much in the news, and immigrants more anxious, this type of fraud seems to be expanding rapidly.

New York Attorney General warns of scammers impersonating immigration officials to extort money

Australia warns on fraud extorting money by threatening to deport people


FBI reports 4000 cases of ransomware every day in the US

Ransomware takes out servers for Bingham County, Idaho.  Demand 25-25K

Ransomware on Android phones quadruples in the last year

Police in Cockrell, Texas lose years of evidence to ransomware fraud


30 new arrests for sextortion in the Phillipines

For the Baker Fraud Report on sextortion fraud by organized gangs click here

Internet of Things

Do we have to hook up everything to the internet?

Hackers take over university’s vending machines, light bulbs connected to Internet and use them to attack other systems

Germany bans kids dolls hooked up to the internet with video and microphones

IRS Frauds

IRS warns of fake charities

Tampa man sentenced for bogus tax returns in MD FL

IRS impersonators are still with us.  Although complaint numbers have gone down since police in India arrested 700 people last fall the fraud has not gone away.  In addition, these frauds are now sending text messages threatening people with arrest if they don’t pay immediately.  The Senate Aging Committee takes complaints directly from fraud victims.  They received more complaints about IRS impersonators in 2016 than from all other frauds combined.  See their report here.   Here is the Baker Fraud Report article on this fraud.

IRS alert:  frauds that rip off tax professionals to get information from them to then do ID theft and bogus tax returns.

ATM Skimming increased 546%

Crooks place hidden readers over ATM devices to read card data and capture passwords so they can steal money. These are often difficult to detect.  But this problem is worldwide, and appears to be growing.

Romanians arrested in Costa Rica for ATM skimming

Two arrested for ATM skimming in Winter Park, FL

Video of an ATM skimmer found at a 7-11 in Seaside, New York

New York Times article on rise in ATM fraud

New Federal Law Prevents Companies from Preventing Honest Customer Reviews

In September of 2015 the FTC sued Roca Labs in Florida. The company sold weight loss pills, and threatened to sue customers who complained about the company to the Better Business Bureau.   Partly in response, Congress recently passed the Consumer Review Fairness Act, prohibiting companies from having contract terms that bars people from doing an honest review of a company.   Here is the FTC’s guidance for businesses on how this law works.


Woman with dual US/Jamaican citizenship sentenced in WD NC

Senator Collins urges Jamaica to do more in Aging Committee hearings


FTC Settles with remaining defendants in case against robocall operation that worked for Caribbean Cruise Line

Fake Prize Mailings

FTC settles on Defendant in operation that sent mailings telling people they had won $1 million but needed to mail back $25 to claim the prize

See the Baker Fraud Report on bogus sweepstakes mailings.

Romance scams

UK hits record number of romance scam complaints.  40M pounds reported lost

Just for fun

Humor — Goofing with a telemarketer