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How to Spot a Fake Check

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

With so many forms of electronic payment available today, you probably don’t write many personal checks anymore. Nevertheless, checks are an increasingly popular vehicle for scammers trying to swindle people out of money.

According to the National Consumers League (NCL), fake check schemes were the third most popular scam committed in 2018. The Federal Trade Commission (FTC) found that reported check fraud cases in 2018 represented a loss of $75 million. The FTC reported a median loss of $1,214 per fraud.

“Fake check scams have been a serious consumer issue for years, and it’s one that continues to be with us with the nature of the scams evolving,” says John Breyault, NCL’s vice president of public policy, telecommunications and fraud.

Scammers use counterfeit personal checks, cashier’s checks and even certified checks for fraudulent activity. So even if you trust a person you’re doing business with — and the check they hand you looks legit — it’s important to look beyond the dollar signs and verify that any check is legitimate.

Beware common fake check schemes

“Check fraud used to entail someone stealing checks out of the mail and forging them,” says Jim Wilcox, assistant vice president of risk operations for Affinity Federal Credit Union, in Basking Ridge, N.J. “But with the internet and the passing of remote deposit captures, the opportunities and means by which people use fake checks to commit fraud has grown exponentially.” These are the four most common fake check schemes:

Foreign lottery scams

With the foreign lottery scam, you get an email or letter that informs you that you’ve won a foreign lottery or received an inheritance from a distant relative. The scammer sends you a check and asks that you deposit it in your bank account and wire back money to pay fees or foreign taxes. The fake check eventually bounces, but you’ve already sent the scammer some of your own real money.

Internet auction scams

This scam targets people selling cars or other high-priced items via online classified ads. The scammer replies to your post and sends you a check, but it’s for more than your sales price. The scammer will claim they made an error in filling out the fake check and request that you deposit it anyway and refund the extra via wire transfer. Their check bounces, leaving you missing the amount you “refunded.”

Check repayment scams

The check repayment scam is similar to the internet auction scam, but this time the scammer who wants to purchase your item says that they’re owed money from a third party who will send their money directly to you in repayment. However, the fake check is for more than the purchase price, and you’re instructed to wire them the difference.

Secret shopper scams

With this gem, scammers tell you that you’ve been hired as a mystery shopper to evaluate the services of a money transfer company. You’re sent a check to deposit into your checking account, then asked to withdraw the money and wire a portion to a specific person. You’re told to “keep” a portion for your services. The fake check bounces and you’re liable for the money withdrawn, which can be several thousand dollars.

How to protect yourself from a fake check

Protecting yourself from fake checks and check fraud means being cautious about accepting checks from anybody you don’t know. There are several steps you can take to ensure you don’t fall victim of a check fraud scam.

Examine the check

First, look very closely at any check you receive — personal, cashier’s or certified. Cashier’s checks used to be as good as gold, says Wilcox, but they’re one of the most common forms of fake checks today. Scam artists often use sophisticated technology to create checks that look real, but here’s what to watch for:

a

Confirm that the payee’s name and the person giving you the check match.

b

Look for security features, such as watermarks.

c

Check for a perforated edge, such as where it’s been torn from a checkbook or register. Counterfeit checks often have smooth edges because they’re printed on a computer.

d

Make sure the check includes the bank logo and address, and that both are correct.

e

Look at the magnetic ink character recognition (MICR) line on the bottom of the check, which will include the bank routing number, the account number, and the check number. Match the routing number to the issuing bank by searching the American Bankers Association website.

f

Look at the paper. Real checks are printed on matte sturdy paper.
  • Confirm that the payee’s name and the person giving you the check match.
  • Look for security features, such as watermarks.
  • Check for a perforated edge, such as where it’s been torn from a checkbook or register. Counterfeit checks often have smooth edges because they’re printed on a computer.
  • Make sure the check includes the bank logo and address, and that both are correct.
  • Look at the magnetic ink character recognition (MICR) line on the bottom of the check, which will include the bank routing number, the account number, and the check number. Match the routing number to the issuing bank by searching the American Bankers Association website.
  • Look at the paper. Real checks are printed on matte sturdy paper.
  • Rub a damp finger over the printed areas of the check to make sure they don’t smear.

Ask yourself if the check source is legit

If you receive a check in the mail or from someone you didn’t contact, take time to investigate who’s giving you money and why. Research the person or company to see if the payment makes sense and check any emails you had with them. Mystery shopping is a legitimate working opportunity, but companies that hire shoppers don’t send checks in advance. Verify that the mystery shopping opportunity is real by checking with the Mystery Shopping Professionals Association.

Do not spend the money before the check is verified

Don’t cash the check right away, but if you need to cash it, hold on to the money and do not spend it. If the check is fraudulent and bounces, your bank has the right to withdraw the funds from your account, which can leave you with a negative balance and overdraft fees.

Under federal regulations, banks must make funds available within one to five days, depending on the type of check. A government or cashier’s check, for example, must be cleared one business day after you deposit the check, which is why they’re commonly used in check fraud. Unfortunately, fake checks can take weeks to be identified.

“The account number and routing number might not jive, and the check could be bounced around in an attempt to be routed to the right bank, adding time to clearing,” says Wilcox.

Report suspected fraud

If you have been the victim of check fraud or you think you’re being scammed, report it. It’s embarrassing to admit you’ve been duped, but scammers won’t be caught if no one reports the activity. Take these steps:

Who’s responsible for a fake check?

It’s bad enough to have fallen victim to a scam, but ultimately you’re responsible for any check you accept and deposit, says Breyault.

“If you wired money, it’s gone and practically impossible to get it back,” says Breyault. “The bank will want to be repaid, and that will fall on the consumer to shoulder the cost.”

The final word on fake checks

Scammers will continue to use fake check schemes as long as they can find willing victims. Don’t fall for their schemes. Scrutinize any check you receive, especially if it comes out of the blue, as with the inheritance scam, or it’s written for more than the selling price during a transaction. If the windfall is too good to be true, it probably is.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Banking

What Do I Need to Open a Bank Account?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The basics you need to open a bank account include a government-issued ID and personal information like your Social Security number and date of birth. Other requirements depend on the type of account you plan on opening. Make the process of opening a bank account as easy as possible by consulting our guide below.

What do you need to open a bank account?

Before applying to open a bank account — in person at a branch, or online — make sure you have the following things ready:

  • A government-issued photo ID: This can include a state-issued driver’s license, a state-issued identification card (an alternative ID for people who don’t drive), a U.S. passport or a military identification card. If you do not have U.S. government-issued identification, some banks and credit unions accept foreign passports and consular IDs.
  • A second form of ID: This can include your Social Security card, a bill with your name and address on it or a birth certificate.
  • Basic personal information: You will need to supply your Social Security number or Individual Taxpayer Identification Number (ITIN), address, birth date and phone number.
  • Proof of address: You need to prove your physical street address, with a utility bill or lease that shows your name and address. Many banks do not accept P.O. boxes as a valid form of address.

Do you need an initial deposit to open a bank account?

Some bank accounts require an initial deposit, and some do not. How much money do you need to open a bank account? It depends on the financial institution.

Many institutions require a minimum deposit to open a bank account, while others allow you to open an account with a zero balance. You can use cash, checks, a money order, a debit card from another account or an ACH transfer to make an initial deposit.

What do you need to open a joint bank account?

If you plan on opening a joint bank account, you will need the paperwork and information outlined above for each of the named owners of the joint bank account. Two or more people who wish to share a bank account can open a joint account. Married couples or people in a relationship often share a joint bank account, but this form of account is available for anyone, regardless of relationship status.

What do you need to open a credit union account?

Credit unions require you to become a member when you open an account. Some credit unions limit membership to people who work in a certain industry or live in a certain city or state. Other credit unions open their membership rolls to anyone, although often you are required to make a one-time charitable donation to join. Check with your credit union of choice before applying to open an account.

What do you need to open a bank account if you are under 18?

Minors under 18 years of age are typically required to have an account co-owner who is over 18. This can be a parent or legal guardian who signs the legal documents.

What do you need to open an online bank account?

The requirements to open an online bank account are very similar to the points we’ve outlined above. Before you enter personal information online, be sure you are on a secure site. Look for the lock symbol or “https://” at the beginning of the URL to verify that your connection is secure. Here’s what you’ll need for opening a bank account online:

  • You will need to enter your personal information into online forms. You should be prepared to enter your Social Security number or Individual Taxpayer Identification Number (ITIN), address, birth date, phone number and email address.
  • You will need a U.S. government-issued form of identification, such as a driver’s license, state-issued ID card (issued for non-drivers), U.S. passport or military identification card. Online banks generally require you to take a photograph of your ID with a mobile device and upload the picture as part of the application process, to verify your identity.
  • Some banks will require you to print out and sign a signature card that you mail in as part of the account opening process. If you are opening a joint online bank account, all parties will need to provide signatures. Signature cards are used to verify your signature when you write or deposit a check.
  • As noted above, some banks require a minimum deposit to open an account while others will allow you to open an account with a zero balance. You can make an initial deposit by ACH transfer from another account using the bank’s routing and account numbers, or by entering a credit card or debit card number.

What kind of bank account do you need to open?

While everyone can benefit from having a checking and savings account, you may have a greater variety of accounts to meet your financial goals. Here are some account types to consider:

  • Checking account: A checking account is for handling everyday transactions, such as paying bills and depositing your paycheck. It provides easy access to your money via paper check, debit card, ATM or ACH transfer.
  • Savings account: A savings account is for stashing money for longer-term financial goals. Generally you should have a checking account and a savings account, as both types comprise your basic tools for sound management of your personal finances.
  • Money market account: A money market account is a hybrid that combines attributes of both checking and savings accounts. Offering higher yields than many traditional savings accounts, money market accounts allow you to access funds via debit cards or checks. In addition to the identifying documents needed to open a checking and savings account, money market accounts typically require a higher initial deposit.
  • Certificate of deposit (CD): With certificates of deposit, you deposit funds for a set period of time and earn a set rate of interest. Some CDs earn higher interest rates than savings accounts.

Do you need to open a second-chance bank account?

If you have a history of too many overdrafts, bounced checks or closed accounts, you may need to open a second-chance bank account. Second-chance accounts let you reestablish your banking bona fides, although they also come with certain limitations or extra fees.

When you apply to open an account, financial institutions check your past banking history to assess how much of a risk it might be to do business with you. ChexSystems provides banking background reports that track your closed checking and savings accounts. The bank will look at your history of overdrawn accounts, negative balances or closed accounts. ChexSystems information typically stays on your report for five years.

What do you need to open a business bank account?

If you want to open a business bank account, the documentation required depends on your business and your location. Here’s what you may need to open a bank account for your business:

  • Ownership documents: You will need to prove the structure of your business, such as sole proprietorship, partnership, LLC or corporation. If your business is owned by more than one person, you will need to provide a partnership agreement that outlines each owner’s rights and responsibilities.
  • Social Security number or Employer Identification Number (EIN): You will need to provide a bank with proof of your EIN. If your business is structured as a sole proprietorship, you can use your Social Security number.
  • Personal identification: The officer of the business will need to provide valid forms of personal identification, such as a driver’s license, state-issued ID card or passport.
  • Business license: Depending on your local government regulations, you may be required to show a business license. Each state and city or township has different guidelines, so check with your area to determine local rules.
  • Assumed name certificate: If your business operates under a name that is different than its legal name, you will need to provide documentation. This is typically called a DBA, or “Doing Business As.” For example, your legal business name might be Sam Smith, LLC, but you do business under the name “Smith Accounting Services.”

What kind of business bank account do you need?

The types of bank accounts available for businesses are broadly similar to personal bank accounts. You may need to open some or all of these accounts:

  • Business checking account: To handle day-to-day transactions, your business will need a business checking account. When you open one, you can deposit revenue and use checks to pay bills. Features vary by financial institution, so make sure to shop around.
  • Business savings account: To save for future purchases or upcoming expenses, you may want to open a business savings account. This will allow you to build a balance and earn a little bit of interest, as well.
  • Business money market account: Another option is a business money market account. This type of account often pays higher interest than a traditional business savings account while offering check-writing privileges. It can help provide a safe place for your earnings to grow and allow you to take care of larger business expenses.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.