Modern banking has come a long way: Gone are the days when you’d have to get to the bank to deposit funds into your account. Thanks to technology, deposits to bank accounts can be done immediately, saving us time and money – and, unfortunately, paving the way for new types of fraud.
Check fraud has been around for a long time, but a new scam using mobile deposit is becoming more common. Mobile deposit fraud (or remote deposit scams) takes advantage of the gap between when money is available in your account and the time it takes for deposited funds to clear.
How it works
Typically, a fraudster will contact you posing as a potential employer, love interest, sweepstakes representative or other interested party with an opportunity to earn money quickly or by asking for help in moving money overseas.
After building some trust with you, the person will offer to deposit money into your account by mobile deposit, if they could just have your information. After the check is deposited, the person asks you to take out some of the money and send it back or spend it. Later, the check ends up bouncing and you are responsible for the amount you had taken out.
Say you post a piece of furniture for sale on a website, and someone responds with interest. They ask for your banking information to make the deposit, and lo and behold deposit more than your offer. They ask you to return the surplus funds. Meanwhile, your bank alerts you the check was fictitious and removes the funds from your account, resulting in the account being overdrawn.
Why it works
A major convenience of modern banking is the ability to access deposited funds immediately. However, the deposit doesn’t officially “clear” and post to your account for a couple days. If you spend the funds right away and the check ends up bouncing, that money is no longer in your account and you are on the hook for whatever you spent.
You know the adage, “if it sounds too good to be true, it probably is”? That applies here. Protect your finances with these tips:
- Pay attention to the source. Don’t give personal or banking information to someone you’ve never met in person or a company you can’t find online.
- Watch your bank accounts. Use online and mobile banking to check your accounts regularly and call about any suspicious activity.
- Do not send funds or pre-paid money cards to somebody you do not know.
- Never divulge personal or bank account information. And don’t be rushed into handing it over. A fraudster may make it sound like they are in an emergency – but if you don’t know them, this should be a sign to cut off all communication.
If you receive a suspicious check, look for these signs of fraudulent activity:
- Typos in names, bank and dollar amounts
- Out-of-state payers and banks
- Missing or faded bank logos
- Notations in the memo-line suggesting legitimacy
Always contact your financial institution about suspicious activity on your statements, and contact the local police department to alert them of potential scams and fraud.