Check Overpayment Scams

Check Washing- What is it and can it happen to you?

 

 

 

 

Check Overpayment Scams: Seller Beware


Thinking of selling a car or another valuable item through an online auction or your newspaper’s classified section? If so, the Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know about check overpayment scams.


According to FTC officials, the scams work like this: Someone responds to your posting or ad, and offers to use a cashier’s check, personal check or corporate check to pay for the item you’re selling. At the last minute, the so-called buyer (or the buyer’s “agent”) comes up with a reason for writing the check for more than the purchase price, and asks you to wire back the difference after you deposit the check. You deposit the check and wire the funds back to the “buyers.” Later, the check bounces, leaving you liable for the entire amount. The checks are counterfeit, says the FTC, but good enough to fool unsuspecting bank tellers.


In a different version of the scam, the FTC says, consumers get a check that has their “winnings” from a lottery. They’re asked to pay taxes or fees. Sometimes, the sender claims to be trapped in a foreign country without any way to cash the check. Either way, federal officials say, if you deposit the check, you’ll lose.


Here’s how to avoid a check overpayment scam:

  • Know who you’re dealing with. In any transaction, independently confirm the buyer’s name, street address, and telephone number.
  • Don’t accept a check for more than your selling price, no matter how tempting. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don’t send the merchandise.
  • Consider an alternative method of payment. As a seller, you can suggest an escrow service or online payment service. There may be a charge for an escrow service. If the buyer insists on using a particular escrow or online payment service you’ve never heard of, check it out. Visit its website, and read its terms of agreement and privacy policy. Call the customer service line. If there isn’t one or if you call and can’t get answers about the service’s reliability, don’t use the service. To learn more about escrow services and online payment systems, visit www.ftc.gov/onlineshopping.
  • If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid. If that’s not possible, call the bank where it was purchased and ask if the check is valid. Get the bank’s phone number from directory assistance or an Internet site that you know and trust, not from the person who gave you the check.
  • If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don’t pressure you to send money by Western Union or a similar company. In addition, you have little recourse if there’s a problem with a wire transaction.
  • Resist any pressure to “act now.” If the buyer’s offer is good now, it should be good after the check clears the issuing bank.
  • Throw away any offer that asks you to pay for a prize or a gift. If it’s free or a gift, you shouldn’t have to pay for it. Free is free.
  • Resist the urge to enter foreign lotteries. Most foreign lottery solicitations are phony. What’s more, it’s illegal to play a foreign lottery through the mail or the telephone.

If you think you’ve been targeted by a check overpayment scam, file a complaint with the Federal Trade Commission at www.ftc.gov or by calling 1-877-FTC-HELP (1-877-382-4357). For more information on buying or selling via an Internet auction site, visit www.ftc.gov/onlineshopping.


The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

 

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Check Washing
What is It?

Check washing takes place to the tune of $815 million every year in the U.S. And it is increasing at an alarming rate.

Using a process known as check washing, mail snatchers erase the ink on a check with chemicals found in common household cleaning products or on the shelves of your local Walmart and then rewrite the checks to themselves, increasing the amount payable by hundreds and even thousands of dollars.

Types of Chemicals Reported Used:

  • Acetone, most widely used, is a highly volatile organic solvent used mainly as a hand-wipe solvent in cleaning applications. It is also a good drying agent for wet parts. But it will erase most inks from a stolen check without any noticeable effect.

Reading the remarks on side of a can of Acetone, you will find out it effectively removes some greases, oils, waxes, and inks. It is commonly used to remove uncured fiberglass resins, varnish, and lacquer and may be useful for applications that require a highly volatile cleaner. Acetone may be applied by hand wipe or immersion in an unheated tank;

  • Benzene,
  • Bleach, used in ever day cleaning in your home. Normally to whiten fibers in clothes washing.
  • Carbon Tetrachloride, most widely used in carpet cleaning,
  • Chloromice "T", a mild form of bleach, used normally in the socking of baby diapers,
  • Fox "IT", used mostly with stamp collectors,
  • Clear Correction Fluids, A high-performance eraser to erase everything from ballpoint pen ink, PPC and Diazo copy ink, to typewriter ribbon ink, drafting ink, and printed matter.

Problem at hand:

One woman became so adept at the technique she prowled the streets with a portable computer, printer and laminating machine in her car, cranking out new identification each time she swiped a batch of bills. Of course she had to take the time to wash the ink from the two vital areas of the check, making sure she doesn't tamper with the written signature.
The problem has grown so severe that many local and federal authorities have formed task forces around the country, with agents from the Postal Inspection Service, U.S. attorney's office, local police forgery units, FBI and Secret Service.
They offer the following advice to people with old-fashioned mailboxes:

  • Don't leave outgoing mail in an unlocked box. Take it to work, drop it in a collection box, hand it to a letter carrier or take it directly to the post office.
  • If you have to leave outgoing mail in your box, do it immediately before the letter carrier comes, and don't raise the mailbox flag.
  • Avoid leaving mail in a box on Sundays and holidays, when letter carriers don't work.
  • Install a lock on your box. This can be done by placing the lock on your mailbox and then cutting a small slit in the mailbox that is large enough to slide mail through, but which is not big enough for a hand to fit in. Residents also can purchase a mailbox with a lock already on it for roughly $20 at a hardware store. In both cases, you will not be able to have outgoing mail picked up.

The Red Flag:

U.S. postal inspectors report an epidemic of mail thefts in the United States and even in other foreign countries, much of it the result of drug users who are spreading the word. However, it has been reported that some bad postal workers are getting into the act. Thieves swipe outgoing checks from mailboxes when they see the red flag up. The bad postal worker removes the check from the "postal bag".
According to a local postal inspector, even U.S. Postal Service collection boxes can be targeted by thieves who wait until the boxes fill up on weekends and then reach inside to rifle letters.
Another problem is when residents leave outgoing mail containing checks in the mailbox before going to work. The thieves will steal a check in the morning and then cashed the stolen check by the afternoon.

Who suffers:

Check washing costs banks and merchants "hundreds of thousands of dollars" a year, and ultimately, we, the consumer, pays for that in higher fees or prices.
If the check was in the mail but creditors are hounding you for payment, it may be that some clever mail thieves snagged your check to pay their own debts.

Positive Protective Measures:

  • Don't put bills in a residential mailbox. The red flag sticking up is like an invitation to a thief.
  • Ask your bank if you can pick up new books of checks. Or ask the bank to have a parcel delivery service deliver them.
  • Shred or burn canceled checks. If you need to save them, make sure the canceled checks are in a secured area, such as a bank lock box, or a wall safe. Don't throw them in the trash.
  • Check bank statements immediately after receiving them. If you fail to report check fraud within 30 days of receiving your monthly statement, the bank does not have to reimburse your loss (UCC Code 4-406).
  • Print a return address on an envelope. A signature can be traced, duplicated or forged.
  • Don't discard credit card records or bills with household trash.

Check Security Features:

Most of the check manufactures have enhanced their check stock to combat Counterfeiting and of course Check Washing. This is the main reason that you should always purchase your supply of business and personal checks from a company who has implemented security enhanced check stock.
Even some of the mail-order companies have included some security measures in their check stock. Before you purchase your new supply, ask what security measures have been adopted into their check stock, both overt (visible) and covert (hidden) characteristics to alert check handlers and to discourage the check fraud artists.
More banks and credit unions are beginning to require their business customers to adopt what is called due diligence procedures that will minimize their exposure to check fraud. One of the easiest ways for companies to meet the ordinary care provisions of the Uniform Commercial Code is to implement paper-based security measures.
If you are in doubt about the purchase of your checks with security features included, have your local bank discuss the protective issues with you. You want to protect your documents against chemical alteration, erasure, toner removal, photocopying , and counterfeiting .

New Security Features Available:

Check manufactures help deter check fraud by making checks difficult to copy, alter, or counterfeit by using some or all of the following security measures:

  • Watermarks. Watermarks are made by applying different degrees of pressure during the paper manufacturing process. Most watermarks make subtle designs on the front and back of the checks. These marks are not easily visible and can only be seen when they are held up to light at a 45-degree angle. This offers protection from counterfeiting because copiers and scanners generally cannot accurately copy watermarks.
  • Copy Void Pantograph . Pantographs are patented designs in the background pattern of checks. When photocopied, the pattern changes and the word "VOID" appears, making the copy nonnegotiable.
  • Chemical Voids . Chemical voids involve treating check paper in a manner that is not detectable until eradicator chemicals contact the paper. When chemicals are applied, the treatment causes the word "VOID" to appear, making the item nonnegotiable. Checks treated with chemical voids cannot be altered without detection.
  • High-Resolution Micro Printing. High-resolution micro printing is very small printing, typically used for the signature line of a check or around the border in what appears to be a line or pattern to the naked eye. When magnified, the line or pattern contains a series of words that run together or become totally illegible if the check has been photocopied or scanned with a desktop scanner.
  • Three-dimensional Reflective Holostripe. A holostripe is a metallic stripe that contains one or more holograms, similar to those on credit cards. These items are difficult to forge, scan, or reproduce because they are produced by a sophisticated, laser-based etching process.
  • Security Inks.. Security inks react with common eradication chemicals. These inks reduce a forger's ability to modify the printed dollar amount or alter the designated payee because when solvents are applied, a chemical reaction with the security ink distorts the appearance of the check. This makes such items very difficult to alter without detection. The chemical reactants produce permanent stains when bleach or solvents are used to alter the check document.
  • INVISIBLE FIBERS (Covert). Embedded in the sheet, fibers are visible only under ultraviolet light, and are extremely difficult to duplicate.
  • VISIBLE FIBERS (Overt). Fibers are visible in ordinary light and arranged on both sides of the check. These fibers will extend from a torn edge to verify its authenticity.

WHAT TYPE OF PEN TO USE WHEN WRITING A CHECK:

If you are a ballpoint pen lover, switch to black ink when security is important. Among water-based inks, remember that gels are the most impervious. But when you're writing checks to pay the monthly bills, only one type of ink, the kind in gel pens, has been found to be counterfeit proof to acetone or any other chemical used in "check washing." Most ballpoint and marker inks are dye based, meaning that the pigments are dissolved in the ink.
Based on recent ink security studies, we highly recommend that you use a gel pen, like the Uniball 207 that uses gel ink that contains tiny particles of color that are trapped into the paper, making check washing a lot more difficult. The pen sells for about $2. Personally I sign all my checks and important documents with one. But if you don't want to switch, do not hesitate to use your favorite fountain pen. Just fill it with ink in one of the more durable colors and enjoy!

 

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