Fake Check Scams Grow; Some Banks Warn Consumers


If it looks like a check, has watermarks like a check, and cashes like a check, it still might not be a check, says the Christian Science Monitor. Check scams are becoming more common. Some financial institutions are warning customers of the dangers; others may not tell account holders that after they make a deposit they may have access to funds before the bank can verify the check. This leaves unwary consumers in a jam. Depositors, not the bank, are responsible for bad checks and associated fees.

Federal law requires banks to give customers quick – often next-day – access to funds, but it may take several weeks to verify that a check is good. An explanation to customers that they have access to funds before a check clears could be seen as an attempt to skirt the law, says Nessa Feddis a lawyer for for the American Bankers Association. Consumers, she says, are in the best position to know whether a payment they’ve received is legitimate, since they know the details of the transaction. “There are normally red flags,” says Feddis. “The broader message is almost back to [what you were told] in third grade: ‘Don’t trust strangers.’ ” Wachovia bank’s fraud detection systems catch more than 90 percent of the 500-600 fake checks its account holders deposit each month. Consumer advocates contend that banks could do more to tell account holders about the risks of check scams.

Link: http://www.csmonitor.com/2007/0806/p13s01-wmgn.html

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