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We're Changing the Face of Banking.
Tips to protect yourself against bad deals and scams
Marketers have lots of ways to find out who you are, where you live, and how you're
likely to spend your money. While many unsolicited offers may be good deals for
you,others may be costly or inappropriate, or even scams. In particular, crooks have
become very good at impersonating legitimate businesses, charities and other
organizations to trick people into giving out valuable information that can be used to
commit identity theft, which involves stealing money using someone else's name.
While laws and industry practices may limit losses for fraud victims in many
cases,innocent victims sometimes end up losing money or spending many hours
clearing their good name.
Here are a few ways you can be better prepared to know a good deal from a bad one
and protect against a variety of scams, including ID theft.
Just having information about your checking account may be enough for a thief
to obtain a bank draft that deducts funds from your account. So unless you
initiate the contact with another party and you know it's reputable, don't provide
details such as your Social Security Number, bank account and credit card
numbers, personal identification numbers (PINs), date of birth, or your mother's
maiden name. Also don't provide personal information via phone or e-mail in
response to an unsolicited e-mail or an Internet advertisement, no matter how
legitimate it may appear. That's because there are fraudulent, copycat e-mails
and sites that are designed to appear to be from well-known companies. If you
want to follow up with a company, use an e-mail address or phone number from
a reliable, independent source that you go to on your own.
1. Never divulge personal information in response to an unsolicited call,
letter or e-mail.
2. Thoroughly check out any offer before agreeing to anything.
Always get key details in writing. Carefully read all the documentation, including
the fine print in applications and contracts, to understand your potential costs,
risks and requirements. Don't just rely on what a sales person tells you or what's
printed in promotional literature. Ask friends and family what they think.
Do some comparison shopping at your bank and one or two other financial
services firms to make sure that the "special" unsolicited offer you received is
really special. With credit card offers, for example, carefully review the terms and
conditions, including the potential fees or penalties, all of which must be disclosed
to you before you incur any charges on the account. By law, the most important
terms in credit card offers must be in a specially highlighted box or near the box.
3. Try to deal only with businesses you already know or that have been
recommended by someone you trust.
This minimizes the chance that you may be lured in by a high-cost company or a
shady marketer, perhaps even a con artist. When in doubt, start with your state
or local consumer protection office (listed in the blue pages of your phone book)
and ask where to go for information on whether a service provider is properly
licensed to do business and whether there are complaints or rule violations tied to
this company. Another resource for complaints against a company is the Better
4. Assume that any offer that "sounds too good to be true" – especially
one from a stranger or an unfamiliar company – is probably a fraud.
Common examples include:
A telephone call or a letter notifying you of winning a lottery or a
sweepstakes that you don't remember entering, and you are told to
pay "taxes" or "fees" before you can claim your prize.
A promise of an investment paying significantly above market rates.
A fake job offer that promises to pay a lot for doing very little (such as
stuffing packages or envelopes at home) and may involve handling or
wiring money. "The crooks mostly want to learn your Social Security
Number from your application or they want you to deposit a fraudulent
check and then wire money to them out of your bank account," said
Michael Benardo, manager of the FDIC‘s financial crimes section.
An Internet friendship or romance that soon leads to pleas for money
If you think that you've already been fooled by a con artist, you can file a complaint
with the government at www.lookstoogoodtobetrue.com/complaint.aspx, a Web site
that is a joint effort of federal law enforcement agencies and corporate partners. You
can also contact the Federal Trade Commission toll-free at 1-877-FTC-HELP
(1-877-382-4357) and your local police or the police where the fraud took place. Ask
to file a written report about the incident.
5. Know the other signs of a scam.
In general, any story that grabs your attention and emotions and then forces you to
act quickly – before you have time to think rationally – may be part of a con game.
Here are some of the classic red flags of financial fraud:
You're told to send money or provide bank account information up front –
before you receive any goods, services or other benefits.
You're pressured to act fast, even before you've seen details in writing.
"Scam victims have been interviewed by researchers and the results
show that even very smart people can be tricked by fast talkers who
spark emotions and then say, ‘This is a limited time offer. Act fast before
it's too late'," Nelson said.
You sense a reluctance to answer questions or provide written
Someone tells an emotional story of being "in danger" or the victim of
fraud or discrimination and then asks for your help, perhaps by placing
funds in an overseas bank account.
You're told you already agreed to donate or pay money, and you don't
remember doing so.
Tips to protect from fake checks and money orders
There's been explosive growth in counterfeit personal and business checks,
cashier's checks and money orders in the last few years, due in part to new
technologies and the growth of the Internet for transactions among strangers.
But what's especially troubling is that individual consumers and businesses are
losing significant sums in these scams – often thousands of dollars – because
they deposited a check from a stranger, withdrew the funds and then sent
money or merchandise before their bank discovered that the check was
fraudulent. In these cases, the depositor most likely will be held responsible for
the entire amount of the fraudulent check. Why? Because by depositing the
check and withdrawing money, the consumer is taking responsibility for the
funds that have been spent or sent before the check is found to be worthless.
And often the withdrawal cannot be cancelled or reversed, especially with wire
transfers, in which funds are transferred out of the account immediately. Also,
the person who receives the check usually is in the best position to realize that
it may not be good. Money isn't the only thing that can be lost to a fake check
scam. In one example reported to the FDIC several years ago, a person "sold" a
classic car then worth $41,000 to a scam artist who used a counterfeit cashier's
1. If you deposit a check from a stranger, discuss the situation with your
branch manager before spending that money or handing over anything of
It's safer not to accept checks from strangers, but if you do, tell the manager about
the circumstances surrounding the check and ask when the check is likely to be
considered "good" (paid).
While federal regulations require institutions to make funds from a deposit available
quickly – generally within one to five business days – it can take a couple of weeks
or longer before the bank discovers that the deposited check is worthless. "The
check could be counterfeit or bounce because of insufficient funds, and your bank
will most likely hold you responsible for that money," said Michael Benardo,
manager of the FDIC's financial crimes section. "If the other party badgers you at
any time about waiting, especially if you are directed to send funds, tear up their
check and stop all communications." So, protect yourself by not touching the
deposited funds until you explain to your branch manager the details of the
transaction and the source of the check, and you wait for the manager's go-ahead
to use the funds.
2. Walk away from any deal if you get a check for more than the amount due
and you're instructed to return the difference.
Let's say you sell a $5,000 item over the Internet and the buyer sends a check or
money order for $10,000. The buyer, who has an explanation why the check is for
more than what you expected, instructs you to deposit the check and wire the
excess amount to his account or to the account of an associate. It may take a
couple of weeks, but eventually the check will be returned as counterfeit. Using our
example, you may need to reimburse your bank for $10,000, even if that's far more
money than you have in your account. You may also have lost the item you were
3. Recognize other warning signs of a check scam.
"It's very difficult for the average consumer or business owner or even bank teller
to recognize a counterfeit check, so you're usually better off looking for the basic
signs of a scam instead of focusing on the check itself," said David Nelson, a
fraud specialist at the FDIC.
In addition to the warning signs we've already
described, here are other red flags of a check fraud
(and additional commentary from Nelson):
The reasons for receiving a check are suspicious. ("How
could you win a lottery you never entered?" Nelson said.
"And if you really won something and owed money, why
wouldn't they just deduct that amount from your winnings?")
You're asked to send money outside of the United States.
("That's because it is difficult to track people down in another
You're pressed to send money right away. ("They're rushing
you to act before you discover that the check is bad.")
You're warned to keep things quiet – to not discuss the deal
with a bank employee or anyone else. ("It's to prevent your
banker or others from warning you about a counterfeit
4. Take additional precautions to make sure a check is good.
Consider insisting on being paid with a money order or a cashier's check (not a
personal check) drawn on a local bank or a bank that has a local branch. That
way you can take the check to that bank's branch to ensure it's valid.
Also consider asking for a money order from the U.S. Postal Service. These
come in values of up to $1,000 for domestic money orders and up to $700 for
international money orders.
To confirm that a Postal Service money order is valid or to cash it, you can take
it to a local post office. You can also verify a Postal Service money order by
using an automated service at toll-free 1-866-459-7822.
Private financial services companies also issue money orders, but it's up to you
to take appropriate precautions. For example, "Don't depend on a phone
number that's printed on a check or money order," Nelson stressed. "If this is a
fraud, one of the criminals may answer and tell you that the check or money
order is legitimate, or you may get a voice mailbox that the swindlers set up to
sound real and reassuring."In general, it's always best to use a phone number
listed in your phone book or another directory, not the number printed on a
check or money order or told to you by the other party. Another way to be more
comfortable that you're dealing with an honest person – especially someone
you're dealing with over the Internet – is to try to confirm his or her name,
address, home number and work number through some independent means,
such as an online database or directory assistance.
5. Immediately report if you think you're a victim of a check fraud or if you
notice something suspicious.
Contact your bank as well as the local office of the FBI (listed in your phone book
and on the FBI Web site at www.fbi.gov/majcases/fraud/fraudschemes.htm.
For additional resources regarding fraud and identity theft protection please visit:
© Homestead Savings Bank 2014 | Member FDIC, Equal Housing Lender