There are many reasons why you might end up accidentally depositing a fake check into your bank account. Scammers often use fake checks as part of various schemes to steal money from unsuspecting victims. They may send you a fake check and ask you to deposit it, then request that you send them a portion of the funds back, claiming it’s for fees, taxes, or some other reason. By the time the bank realizes the check is fake, you’re left responsible for the full amount.
Why do these scams work? The fake checks generally look just like real checks, even to bank employees, with appropriate watermarks, and they may appear to be issued by legitimate financial institutions.
Here’s a closer look at what happens if you accidentally deposit a fake check, plus ways to spot counterfeit checks.
Consequences of Depositing Fake Checks
If you accidentally deposit a fake check, everything may be fine at first. By federal law, the bank must make the funds available to you within one or two business days. When the funds are made available in your account, the bank may say the check has “cleared,” but that doesn’t mean it’s a good check.
Fake checks can take weeks to be discovered and sorted out. When the bank realizes the check is fake (often after you’ve spent the money or given it to someone else), here is what happens:
- You have to cover the cost of the check. The bank will typically debit your account for the amount of the fake check, and may also charge you a processing fee.
- You’ll lose any money you sent to the scammer. While in some rare cases you may be able to request a chargeback on a fraudulent transaction, it’s unlikely that you will be able to get any money back once you’ve given it to a scammer.
- You may have to pay overdraft fees. If you spent the check amount before the bank realized it was fake and debited your account for the amount, it’s possible your account could get overdrawn. In that case, you could face overdraft fees, which can run $30 to $35 per transaction.
- You may have to pay late fees. If you aren’t able to pay your bills because of insufficient funds after depositing a bad check, companies may charge you late fees.
- Your bank could close or freeze your account. Banks will often freeze or close accounts for suspicious activity, including attempts to pass off bad checks. You’ll want to check your bank deposit account agreement to see in what scenarios your bank can close your account.
- It could hurt your credit score. If you relied on the check to pay upcoming bills, you might miss their due dates. Because payment history is the biggest factor credit bureaus use to determine your credit score, missed payments can do damage to your credit.
- Your banking history could be tarnished. The bank may report the fake check incident to the banking reporting agency ChexSystems. If so, the agency will then record that information in its files about your checking history. Banks and credit unions may use that information to determine whether to allow you to open a bank account in the future.
Can You Go to Jail for Depositing Fake Checks?
Whether or not you’ll face criminal charges (and potential jail time) for depositing a fake check will depend on whether or not you knowingly deposited a fake check, as well as the laws in your state. If you are simply the victim of a scam, you likely won’t face criminal charges or jail time.
Knowingly committing check fraud, however, is a serious crime that can result in significant fines and even jail time. In Indiana, for example, the lowest level of check fraud is a misdemeanor, which can lead to imprisonment for up to one year and a fine of $5,000. If the amount on the check was between $750 and $50,000, you will instead be charged with a felony. The potential sentence for this is six months to two- and-a-half years in jail, plus up to a $10,000 fine.
If you are convicted of a check fraud felony in New York State, on the other hand, it could mean up to seven years in prison.
6 Tips to Spot Fake Checks
Counterfeit checks can look incredibly real, making them difficult to spot without careful examination. To protect yourself from falling victim to check fraud, it’s important to know how to identify a counterfeit check. Here are six tips to help you spot a fake.
1. Feel the Edges of the Check.
If the check is legit, it should have one perforated edge (where it was ripped from a checkbook). A check that is smooth on all sides is a tipoff that it’s a fake.
2. Examine the Paper
Genuine checks are usually printed on high-quality paper with intricate designs that are hard to replicate. Hold the check up to the light to see if it has watermarks or security threads. Genuine checks often have these features, while counterfeit checks may appear flat and lack these security measures.
3. Check the Bank Information
Verify that the bank’s name and logo on the check match the ones used by the actual bank. You can do this by visiting the bank’s official website or calling their customer service hotline. You can use an online tool like BankFind to check if a bank is backed up by the Federal Deposit Insurance Corporation (FDIC).
4. Scrutinize the Check Amount
Be wary of checks that have unusually high or round amounts. Scammers often use these amounts to make the check look more appealing. If you receive a check for an unexpected amount, it’s a good idea to contact the issuer directly to verify its authenticity.
5. Look for Typos
Counterfeit checks often contain spelling mistakes, grammatical errors, or inconsistent fonts. Carefully review the check for any such errors, as they can indicate that the check is fake.
6. Be Wary of Pressure Tactics
deposit the check quickly. They may claim that the check is a limited-time offer or that you must act fast to receive a prize or reward. Take your time to verify the check’s authenticity before taking any action.
What if Someone Else Deposits a Fake Check Into Your Account?
If someone else deposits a fake check into your account, the situation can be complex and you’ll want to take prompt action to mitigate any potential negative consequences.
As soon as you become aware of the fraudulent deposit, contact your bank to report the issue and give them all the relevant details, including the date of the deposit, the amount, and any other information you have about the check. It’s also a good idea to ask your bank to place a hold on your account to prevent any further transactions from occurring until the situation is resolved. This can help prevent additional fraudulent activity.
As your bank investigates the fraudulent deposit, they may request documentation to support your claim that the deposit was fraudulent, such as copies of the fake check, any communication you have had with the person who deposited the check, and any other relevant information.
Going forward, you’ll want to take steps to protect your account from further fraudulent activity. This may include changing your online banking passwords, setting up alerts for suspicious activity, and being cautious about sharing your account information.
The Takeaway
Check fraud is just one of the many ways that scammers con people into giving them money. If you unknowingly deposit a fake check into your account, the consequences include fees and, possibly, a negative mark on your banking history and the closing of your account. To avoid being scammed, look for the signs of a fraudulent check, and avoid cashing a check that you weren’t expecting, or for more than the agreed-upon amount.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
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12 Money Wise Things You Can Do to Boost Your Savings (ASAP)
Read on for money-stretching strategies that may help make it easier to make ends meet, plus have a little bit of extra.
1. Tracking Your Money
If you want to do more with your money, it helps to first figure out what you are currently doing with your money.
You may have a good sense of your fixed monthly expenses (such as rent/mortgage, car payments, groceries, student loans), but smaller everyday expenses have a tendency to slip through the cracks — yet, nevertheless, add up.
A good exercise is to track how much you’re actually spending each day (that includes every cash/debit/credit purchase you make, plus every bill you pay) for a month or so.
You can do this by carrying around a notebook or saving all of your receipts and putting them into a spreadsheet on your computer. There are also a number of apps that can make the process of tracking your daily spending easy.
This can be an eye-opening exercise. Spending is so frictionless these days, many of us really don’t have a handle on how much money we are actually spending.
Seeing it all in black and white can help you think twice before buying something nonessential, and help you start becoming much more intentional with every dollar.
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Once you’ve done the work of tracking your monthly expenses, you may next want to compare this to how much money (after taxes) is coming in each month.
If you are consistently spending more than you are bringing in, you may want to set up a budget to help you get these two numbers better aligned.
The process requires grouping all of your spending into categories, seeing where you may be able to cut back, and then setting up some monthly spending parameters.
There are a number of tools and apps that can help you create — and stick with — a household budget, but even just keeping a ledger or a basic spreadsheet can help you gain more control over where money is falling through the cracks.
While the idea of living on a budget may sound like a drag, the truth is that planning how you want to spend your money can often lead to having more money to spend on the things you want. Plus, there are many types of budgets, and one of them probably suits your personal and financial style well.
A budget can also help guide your money toward short- and long-term financial goals like an emergency fund, a down payment for a house, and retirement savings.
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Knowing when your bills are due and paying them on schedule could save you money in a few different ways.
First, it can help you to avoid paying interest and late-payment fees.
Second, It might also maintain your credit score. A good credit score is important because it can help you qualify for the best interest rates on credit cards and loans.
And the less money you have to pay in interest, the faster you’ll be able to pay off debts – and the more money you’ll have to spend on other things. (Learn more atHow Much Money Should Be in Your Emergency Fund?)
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Some of those recurring bills (like cable, internet, your cellphone, car insurance) may not be set in stone.
It might take some research — and a little nerve — but you may be able to negotiate for a lower rate from some of your service providers, especially if you’re dealing with a company that’s in a competitive market.
Before you call or email a business or provider, it can help to know exactly how much you’re paying for a service, what you’re getting for your money, and how much the competition is charging for the same or similar service.
It’s also a good idea to make sure you are communicating with someone who actually has the power to lower your rate and, if not, ask to speak with someone who does.
It may also be helpful to let a provider know that if they can’t do better, you may decide to switch to another company (and you might).
You can also try to talk your way to a better deal with other expenses, such as negotiating medical bills.
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Another way to help make your money go further is to spend less on interest payments on debt.
If you can pay down that debt, you could use the money you’re now throwing away on interest to pay other bills, build an emergency fund, invest for the future, or save for a vacation or some other goal.
Reducing debt is easier said than done, of course — but choosing the right debt reduction strategy may help.
- Since credit card debt typically costs the most in interest, you might consider chipping away at these debts first or, if possible, wiping them out completely. You could then move on to the debt with the next-highest interest rate, and so on.
- Another approach to reducing debt is to pay the minimum toward all your accounts, and then pay any extra you can toward the debt with the smallest balance. When that debt is paid off, you can move on to the next smallest balance, and so on.
- If you can qualify for a lower interest rate, another option might be to take out a personal loan that consolidates all those high-interest debts into one more manageable payment.
Getting rid of that damaging debt can have long-range consequences as well.
If you can lower your credit utilization ratio, which shows the amount of available credit you have, you could build your credit. And that, in turn, could make it easier to qualify for lower-interest loans and credit cards in the future.
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Unless you’re vigilant about checking your statements, you might not even notice the fees your bank may be charging every month for your checking and savings accounts.
They might include service fees, maintenance fees, ATM fees (if you don’t use in-network machines), minimum balance fees, overdraft or insufficient funds fees, and/or transaction fees. And all those little nips can take a toll over time and could even leave you with a negative bank balance.
If you see that your bank is hitting you with one or more monthly fees, you may want to consider shopping around for a less expensive bank, which might involve switching banks to an online-only financial institution. Because online financial institutions typically don’t have the same overhead costs banks with physical branches do, they generally offer low or no fees
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If impulse purchases are your downfall, consider trying a temporary spending freeze, during which you avoid buying anything that isn’t a must.
Or maybe pick a single category (shoes, wine, concerts) or a specific store to stay away from for a certain period of time.
To help keep you motivated, you might track the money you didn’t spend during your freeze and then put it to use paying down debt, starting an emergency fund, or saving for a down payment on a home or other short-term financial goal.
Once you start seeing the benefits of saying no to impulse purchases, you may find yourself spending less even after the freeze is over.
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Another way you may be able to make your money stretch is to make a list any time you’re going to shop, keep it in your pocket or on your phone, and then stick with it in the store.
And lists aren’t just for grocery shopping. You could make one before you hit the pharmacy, the mall, the local coffee shop, the sporting goods store, or just about anywhere you might wander off course.
Keeping a list close at hand can help avoid having to go back to the store because you forgot something (keeping store visits to a minimum), and you might be less tempted by items that aren’t on your list.
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If your favorite retailers tend to bombard you with emails alerting you to their latest and greatest sale, you may want to think about getting off their e-mailing lists.
Sales and great deals are happening all the time, and generally the best time to purchase something is when you really need it.
Even if you don’t find that needed item at its lowest ever sale price, you will likely end up spending less than buying more things simply because they are on sale.
If the bait to buy doesn’t constantly land in your inbox, you’ll be less likely to take it (and won’t even know what you are missing out on). This move could quickly translate into more cash or one less bill at the end of the month.
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Another way to stretch your dollars is to consider how you might get a higher return on any money that is sitting in the bank earning little to no interest.
Higher-yield savings options you might consider include an online savings account, checking and savings account, certificate of deposit (CD), or a money market account.
For a longer-term payoff (and potentially higher rate of return), you may also want to consider putting more money into your 401(k) or other retirement fund, as well as starting or adding to a non-retirement brokerage account.
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Loose change may seem fairly worthless, but over time it actually can add up, and might help you help you pay a bill or buy a nice dinner.
Instead of letting coins live indefinitely in the bottom of your bag or the cup holder in your car, consider setting up one money jar in your home to collect it all.
Then, every month or so, you might sort and roll the coins to take to the bank. (You can also use a coin-counting machine, available in some stores, but keep in mind that some deduct a fee, or percentage of your change.)
If you rarely use cash anymore, you may still be able to make good use of virtual change. Many mobile apps (perhaps the one your bank provides) and credit/debit card accounts offer users the opportunity to automatically round up purchases to the nearest dollar and have that money transferred into a savings account.
So, for example, if you bought a doughnut for $1.25, the purchase would be rounded up to $2, and the extra 75 cents would be sent to your account to go toward a savings goal. (Learn more atPersonal Loan Calculator).
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It can be incredibly tempting to use a tax refund or a work bonus to buy something fabulous. And there’s nothing wrong with an occasional splurge.
But you may also want to consider using that money to pay down a high-interest credit card, make an extra payment on a loan, or start (or add to) a high-yield savings vehicle or other investment.
Any of these moves can help you stretch those dollars, either by cutting the amount of interest you’ll owe over time or adding to the interest you’ll earn.
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With a few smart savings strategies, you might be surprised at how much further you can stretch your money each month. Getting started is simply a matter of tracking your spending so you can then find ways to save.
Some money stretching moves might include negotiating with (or switching) service providers, putting a bit more money towards debt reduction, knocking down (or eliminating) monthly bank fees, reducing the temptation to make impulse purchases, and finding ways to make your savings grow faster.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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