What Happens if You Unknowingly Deposit a Fake Check?

Did You Accidentally Deposit a Fake Check?

Tammy was struggling to care for her elderly parents when she received an email offering her a new job [*]. It finally seemed like her luck was turning around, especially after the interview — when Tammy’s prospective employer offered to pay for a new laptop. 

All Tammy had to do was deposit a check for $1,900 and send the money to another payee via Zelle.

When the $1,900 appeared in her account, she went ahead with the transfer thinking there was no risk. But by the time her bank realized the check was fake, it was too late. They charged the check’s full amount back to Tammy, leaving her in the red after having sent all her own money to the scammer.

In 2021 alone, Americans reported over 39,000 fake check scams to the Federal Trade Commission (FTC), costing $78 million [*]. Even worse, people in their 20s were more than twice as likely to fall victim to fake check scams [*].

In this guide, we’ll explain what happens when you deposit a fake check (and if you’re liable for the money), how to spot common check scams, and what to do if you get scammed.

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What Happens When You Deposit a Fake Check?

If you accidentally deposit a fake check, here’s what will happen:

1. You deposit the check at your bank, an ATM, or by using a mobile banking app.
2. By federal law, the bank must make the funds available to you within one or two business days. This is often before the bank has a chance to verify whether the account or check is authentic.
3. After you’ve deposited the money (and potentially spent it or sent it to someone else), the bank inspects the check and finds that it isn’t legitimate.
4. Then, the bank debits your account for the amount of the fake check, and may also charge you a processing fee.

Due to the Federal Expedited Funds Availability Act (EFAA), banks must make funds available to customers within a specific amount of time — usually 24 hours. But, it can take days or weeks before banks find out that the check was counterfeit. And in the meantime, you may have already spent the money. 

Fake check scams work in the gap between when you receive the money and when your bank finds out that the check is fraudulent.

Using classic scam tactics, a con artist will send you a check and ask for some or all of the money back via bank transfer, cash, or gift cards.

By the time you find out that the check bounced, the scammer has run off with your money. This leaves you out of pocket for whatever you sent the scammer, plus any of the money from the check that you’ve withdrawn or used.

What Are the Consequences of Depositing a Fake Check? 

Many people who deposit fake checks are unknowing victims. But depositing a fake or washed check, even if you didn’t realize it, can have serious consequences:

• You may have to pay back the full amount of the check. In most cases, once a check is found to be fraudulent, the amount will be charged to your bank account. Worse, the bank may charge you an additional fee for processing a fake check.
• You’ll lose any money you sent to the scammer. While in some cases you may be able to request a chargeback on a fraudulent transaction, you’re highly unlikely to get any money back once you’ve sent it to a scammer.
• Your bank could close or freeze your account. Banks routinely freeze or close accounts for suspicious activity, including attempts to pass bad checks.
• You could have to pay an overdraft or late fee. If you spend the money you received and then get charged for the full check amount, your account may be overdrawn. In this case, you might be charged overdraft fees by your bank, or late fees if you miss a bill.
• 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 makes up 35% of your credit score, missing a single bill can leave lasting damage.
• Your banking history could be tarnished. A history of fake check deposits can result in banks and credit unions refusing to let you open a checking account.
• You could face jail time. Depending on your state, you can face criminal penalties for a misdemeanor or even a felony for depositing fake checks with the intent to defraud. However, if you’re the victim of a scam, you’re unlikely to face fines or jail time.

⛳️ Related: Do Banks Refund Scammed Money? →

Are You Liable for the Money From a Fake Check? 

Unfortunately, in most cases, you will be liable for money received from a fake check.

But victims aren’t always required to front the cost. To find out whether or not you’re liable for the fake check, you’ll need to examine your deposit account agreement, your bank’s policies about fraudulent checks, and your state’s laws.

Alternatively, you can contact your financial institution and ask them directly.

What Should You Do When You Realize You Deposited a Fake Check?

If you’re a victim of check fraud, take the following actions as quickly as possible to minimize the damage.

• Report the fraud to your bank. Contact your bank immediately and let them know about the fraud. Request that they don’t take any negative actions against you. If you’ve already spent the check amount, try to negotiate a repayment plan so that you aren’t charged additional fees.
• Try to stop the payment. If you realize the check is fraudulent before the bank does, you may be able to stop it from being cashed. Likewise, if someone cashed a fraudulent check in your name, the bank may be able to freeze your account to prevent funds from being withdrawn.
• File complaints with consumer protection agencies. Submit complaints with the Federal Trade Commission (FTC), your state’s Attorney General, the U.S. Postal Inspection Service (USPIS), and the FBI’s Internet Complaint Center (IC3).
• Contact any creditors that may be impacted. If you owe money and thought you could repay your debts by using funds from the counterfeit check, contact your creditors and inform them of the situation. You may be able to negotiate new repayment plans and avoid any negative consequences or late fees.‍
• File a police report. If someone withdraws funds from your account using a forged check, the bank may be required to reimburse you. However, you’ll need a report from local law enforcement to qualify. In this case, you should report the fraudulent activity to your local police department.‍
• Monitor your credit. If you’ve already been the victim of check fraud, it’s a good idea to monitor your credit report, credit cards, and bank accounts for fraudulent activity. Aura’s top-rated identity theft protection with credit monitoring can alert you in near real-time up to four times faster than other companies.

How To Recognize (and Avoid) Fake Check Scams 

Scammers are becoming more sophisticated, and often create a sense of urgency to make you act without thinking. To avoid fake check scams, you need to be constantly on the lookout. Here’s how you can recognize and avoid check fraud scams.

Learn to spot the most common fake check scams

Fraudsters have developed a handful of schemes to try and get you to deposit fake checks — from offering you fake jobs as a mystery shopper or personal assistant to selling online goods.

As with other scams, several red flags should alert you that something isn’t right. And remember the golden rule of fraud prevention: if it sounds too good to be true, it probably is. 

Examples of common fake check scams:

• Scammers offer to send you a check for more than you expect. Known as an overpayment scam, scammers pay for an item using a personal check with an amount higher than your asking price. They then try to get you to transfer the extra money back to them before you realize that the check has bounced. 
• Scammers claim you’ve won a prize, but you have to pay a fee to “unlock” it. In lottery and “sudden winnings” scams, you’re told that you’re entitled to a large, unexpected sweepstakes payout. Scammers send you a check for the prize but request that you send them money to cover taxes, shipping, or processing costs.
• Scammers pretend to hire you as a mystery shopper. In this scam, the fraudster tells you that your job is to test a company that processes payments, like a wire transfer service. They give you a check and ask you to deposit it and then transfer the money to someone else. When you do, the scammer disappears with your money.

⛳️ Related: What Is Check Washing? How Can You Protect Yourself? →

Inspect checks to make sure they’re legitimate

Spotting a fake check isn’t always easy, but there are many clues that you can look for. Whenever you receive any type of check — whether it’s a personal check or a cashier’s check — take time to examine it for signs of fraud.

How to identify a fake check:

• Feel the paper and edges. A real check will have one perforated edge where it has been ripped from a checkbook. If your check is smooth on all sides, it’s most likely fake. Legitimate checks are also printed on thick paper stock with a matte finish. If your check feels flimsy, it’s probably fake.
• Check the logo. If your check has no logo, or displays a logo from a bank you’ve never heard of, it is very likely fraudulent. Likewise, if the logo is from a legitimate bank but looks faded, it may have been copied. The same goes for any watermarks or other symbols and patterning that appear on the check.
• Verify the bank. Confirm the issuing bank’s official website to ensure that it’s real. If there’s no address or the address is a P.O. box, the check is fake. You can also search for the bank via the Federal Deposit Insurance Corporation (FIDC) BankFind tool, research the routing number on the check, or call the bank via the contact information listed on its website. Never call the phone number on the check as it could be a scammer’s number.
• Verify the check number. There should be a check number appearing in the upper-right corner and in the magnetic ink character recognition (MICR) line. These numbers should match. If not, the check is fake. Also be on the lookout for low check numbers, as this indicates that the check is from a new account (and likely a scam).

Wait until the check has officially cleared before spending any money

Even if you’ve received the funds, your bank can and will charge it back if the check bounces. To avoid late fees, overdrawn fees, and other consequences, your best bet is to simply wait until the check has officially cleared. 

How long you should wait:

• To be safe, wait 30 days. A check will usually clear in 1–3 business days, but it may take several weeks in some cases. If you have sufficient funds to cover any upcoming debits in case the check is fraudulent, wait 2-3 days before spending it. If you’re unsure, wait 30 days — checks from fake or empty accounts will bounce within this time frame.
• Ask your financial institution. If you desperately need the money, you can contact your bank to determine whether the check has cleared. Make sure to explain to the bank employee that you want to know if the bank has verified the check. Otherwise, they may think you want to know when you can spend the money you’ve received — which does not necessarily mean the check has been verified.

⛳️ Related: What Can Scammers Do With Your Bank Account Number? →

Never send back money from a check (or use the money to buy gift cards, crypto, etc.)

Check fraud usually involves convincing the victim to send legitimate funds in return for a fraudulent check. If someone has asked you to send back the money via a money transfer, cryptocurrency, or gift cards, they’re trying to scam you.

What to do instead:

• Discard the check. Never deposit any check or money order from a stranger who asks you to wire the money back to them. The check will bounce, and you will be forced to repay the bank as the account holder.
• End the transaction (and communication) immediately. If you discover you’re dealing with a scammer, immediately end all communications and attempt to reverse any transactions that you’ve already made.
• Report the fraud. Tell the FTC, IC3, and your bank about the attempted fraud. If you already lost money to the scam, ask your bank if there’s anything you can do to get the money back.

⛳️ Related: Did You Get Scammed on Cash App? Here’s What To Do →

Don’t accept checks for more than the amount you were expecting

When you receive a check, determine whether the amount is correct and as expected. Scammers usually make out checks for more than the amount you agreed upon so that they can then convince you to send the overpayment back via money transfer or other payment methods.

What to do instead:

• Ask the buyer to write a new check with the correct amount. Never deposit a check that you suspect is fraudulent. Instead, contact the buyer to send a new check with the correct amount. If they refuse or ask you just to send them the difference, you know it’s a scam. 
• Don’t give in to pressure. Scammers often try to get you to act quickly, claiming there’s a shortage of time. This is a tactic to get you to act without thinking. Instead, take your time and make sure everything is above board before you do anything.

⛳️ Related: How To Tell if Someone Is Scamming You Online →

Were You the Victim of a Check Scam? Do This

If you’ve fallen victim to a fraudulent check scam, you must act quickly to secure your identity.

• Don’t get scammed twice. There are many scammers out there who think if you’ve been scammed once, you can be scammed again. You may be dealing with the original scammer, or it might be someone claiming to be able to retrieve your lost funds. Know the signs of a refund and recovery scam and avoid falling victim twice.
• Check your insurance coverage. While many insurers don’t cover check fraud, there’s a chance that yours does. Some providers can also walk you through the steps of fraud recovery. For example, Aura’s team of White Glove Fraud Resolution Specialists will help you navigate this complicated process and are available anytime via phone or email. Aura also covers every adult member on your plan with $1,000,000 in insurance for eligible losses due to identity theft.
• Set up a fraud alert. Once you’ve alerted the authorities that you’ve been the victim of fraud, you can ask the major credit bureaus (Experian, TransUnion, and Equifax) to place a fraud alert or credit freeze on your account. This will help prevent scammers from opening new accounts in your name. 

The Bottom Line: Don’t Get Burned by Fake Checks

Check fraud is just one of the many ways that scammers trick unsuspecting victims into parting with their hard-earned money. To avoid being scammed, look for the signs of a fraudulent check — and never cash a check that you weren’t expecting. 

To keep your accounts safe from identity thieves and cybercriminals, consider signing up for Aura. If anything goes wrong, Aura is available 24/7 to help you recover from the damages of fraud.

Protect your finances (and your identity). Try Aura free for 14 days.