Fraudulent cheques are used to pay for services or for some type of fraudulent scheme. The cheques and money orders are key elements in many advance-fee scams, such as:
- auction/classified listing overpayment;
- lottery scams;
- inheritance scams; and,
- when a "payment" to the victim is required to gain, regain or further solidify the victim's trust and confidence in the validity of the scheme.
The use of cheques in a scam hinges on common practice in countries concerning cheques.
When an account holder presents a cheque for deposit or to cash, the bank must (or in other countries, usually) make the funds available to the account holder within one - five business days. The cheques clearing process normally takes several business days and can take up to a month when dealing with foreign banks.
The cheque given to the victim is typically counterfeit but drawn on a real account with real funds in it. With software and/or pre-printed blank cheque stock, using the correct banking information, the scammer can easily print a cheque that is genuine-looking, passes all counterfeit tests, and may even clear the paying account if the account information is accurate and the funds are available.
It eventually becomes apparent either to the bank or the account holder that the cheque is a forgery. This can be as little as three days after the funds are available if the bank supposedly covering the cheque discovers the cheque information is invalid, or it could take months for a business or individual to notice the fraudulent draft on their account.
Once the cashing bank is alerted that the cheque is fraudulent, the transaction is reversed and the money removed from the victim's account.
Ways to spot a fraudulent cheque
With present day computer software and printers, a scammer can easily print a cheque that is genuine-looking, and can pass most counterfeit tests.
If a cheque was sent to you for no reason from someone you do not know, for work you have never performed or sounds too good to be true, more than likely the cheque is fraudulent.
One sure method is to have your banking institution contact the issuing company or the bank (for the account) the cheque is drawn on. Your institution can confirm whether it is a legitimate cheque made payable to you.