Integrated Global Business Solutions (IGBS)

Business Alert from November

Don't fall victim to the latest check cashing scam

If you're planning to sell that leather sofa or late-model car via Ebay or Craigslist, beware! You could be the target of a relatively new scam that's sweeping the country.

Here's how it works: You post an online classified ad to sell your merchandise, and an apparently legitimate buyer responds. Often that buyer is located in another country, such as Nigeria, England, the Netherlands, or Canada. The buyer sends you a check for an amount greater than you bargained for. You contact the buyer, who notes the “mistake” and asks you to wire the difference to his or her account.

Unfortunately, the check you received is counterfeit. But by the time the bank discovers that fact and notifies you — sometimes weeks or even months later — the money's already been transferred out of the country. And guess what? If you've withdrawn funds based on the fake check, you're on the hook to reimburse the bank.

How can you protect yourself from this type of fraud? Here are three suggestions:

Never wire funds. If a buyer asks you to wire money through Western Union, MoneyGram, or a similar service, don't. Fraudsters love electronic fund transfers. They know that banks are required by law to make deposited funds available within one to five days, but processing a check and discovering that it's counterfeit can take much longer. Although the money may be available for transfer, don't assume that the check is legitimate. Even if a check bears the name of a legitimate business, that's no guarantee. Con artists have been known to “dummy up” fake checks with legitimate business information.

Trust your instincts. Think about the transaction and apply a healthy dose of skepticism. Does something seem out of whack? Is the buyer asking for something out of the ordinary? Why would someone in another country want this product?

Deal locally. If you're advertising through an online classified service, sell to folks you can meet in person. This alone will help you avoid most scams, including check cashing fraud.

If you think you've been the victim of a check cashing scam, contact your bank or credit union and file a report with local law enforcement.

The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or business consulting.

If you have any questions or comments contact an IGBS senior business consultant at 703.934.6170