FTC Warns about “Check Overpayment” Scams
“Check overpayment” scams target consumers selling cars or other valuable items through classified ads or online auction sites. Unsuspecting sellers get stuck with a big loss when scammers pass off bogus cashier's checks, corporate checks, or personal checks. The Federal Trade Commission has issued a new consumer alert, “Check Overpayment Scams: Seller Beware,” that explains this scam and offers consumers tips on how to protect themselves and their pocketbooks.
According to the FTC, a check overpayment scam begins when a scam artist replies to the classified ad or auction posting and offers to purchase the item for sale with a check, then comes up with a reason for writing the check for more than the purchase price for the item. The scammer asks the consumer to wire back the difference after the check is deposited. Later, the scammer's check bounces, leaving the consumer liable for the entire amount. The FTC says the scam is able to progress because, though the checks are counterfeit, they may look good enough to fool bank tellers.
The FTC gives the following tips to avoid check overpayment scams:
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Know who you're dealing with. In any transaction, independently confirm the buyer's name, street address, and telephone number.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
In another version of the scam, a consumer is asked to pay taxes or fees on “foreign lottery winnings.” When he or she goes to cash the “winnings” check, the sender claims to be trapped in a foreign country with no way to produce the cash. The FTC offers the following advice for consumers: throw away any offer that asks you to pay for a prize or “free” gift; and do not enter foreign lotteries – most solicitations for them are fraudulent, and it is illegal to play a foreign lottery through the mail or by telephone.
Additional Resources
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The links below are for your information only. The goal of the Division of Consumer Services is to provide information to consumers and additional web sites that will better inform you. The Florida Department of Agriculture and Consumer Services does not review or confirm these sites for accuracy.
Federal Trade Commission
Whether you're buying direct from a business or an individual, an online “retailer” or an Internet auction, shopping online can be fun, easy, practical , and economical. But, just as in the bricks and mortar world, the Internet shopping experience can be marred with unscrupulous dealers constantly devising new ways to deceive consumers out of their money. This site will provide you with helpful information to become a smart online shopper.
The Nigerian Counterfeit Check Fraud - Internet Fraud Alert
Overpayment fraud is bankrupting thousands through online and offline classifieds. (Fraud-Aid.com online article)
Updated 12/22/04
