Fake Check and Overpayment Scams: Stay Informed and Protect Your Business

In today's fast-paced digital landscape, business owners must be more vigilant than ever to protect themselves from scams and fraudulent activity. Scammers are constantly devising new tactics to exploit unsuspecting business owners, often resulting in financial loss or damage to a company's reputation. One scam that has been on the rise in recent years is the fake check or overpayment scam. These scams can occur in various forms and target businesses of all sizes. In this article, we will discuss what fake check and overpayment scams are, how they work, and provide tips to help you avoid falling victim to these fraudulent schemes.

Understanding Fake Check and Overpayment Scams

Fake check and overpayment scams involve a scammer sending a counterfeit check or money order to a business, often for an amount greater than the agreed-upon transaction. These scams typically target businesses that offer products or services online, but they can also affect brick-and-mortar establishments.

The scammer may pose as a customer, client, or even a supplier. They will send a check or money order as payment, often overpaying by a significant amount. The scammer then contacts the business, claiming the overpayment was a mistake, and requests that the difference

Examples of Fake Check and Overpayment Scams

Example 1: A home improvement contractor receives an inquiry for a remodeling project. The scammer sends a check or money order that exceeds the agreed-upon deposit amount. They then contact the contractor, claiming the overpayment was a mistake, and request that the difference be returned via a wire transfer or another untraceable method. The scammer may also claim that the extra funds are intended to cover the cost of materials from another supplier and ask the contractor to transfer the funds directly to the supposed supplier.

Example 2: A service-based business owner, such as a plumber, receives a request for emergency services. The scammer sends a check or money order for a larger sum than the estimated cost, explaining that they want to ensure the job is completed promptly. Once the payment is received, the scammer asks for the difference to be returned, citing a change in the scope of work or another excuse. In some cases, the scammer may claim that the overpayment is meant to cover additional services from a third party, and ask the business owner to send the extra funds to that third party.

Tips for Recognizing and Avoiding Fake Check and Overpayment Scams

To protect your business from fake check and overpayment scams, consider the following tips:

  • Be cautious of overpayments: If a customer overpays by a large amount, it could be a red flag. Verify the legitimacy of the payment before proceeding with any refunds or work.
  • Confirm the identity of the client: Request identification and verify the client's contact information to ensure you are dealing with a legitimate customer.
  • Wait for the payment to clear: Do not refund any overpayment or start any work until the check or money order has cleared in your bank account. Keep in mind that a check can initially appear to clear, only to be discovered as fraudulent later.
  • Be wary of unusual payment methods and requests: If a client insists on using an unconventional payment method, such as a wire transfer or a pre-loaded debit card, or asks you to forward funds to a third party, proceed with caution.
  • Educate your employees: Make sure your employees are aware of these scams and know how to recognize and report suspicious activity.