Counterfeit Payment Fraud
Counterfeit payment fraud occurs when someone uses counterfeit money orders, cashier’s checks, credit cards, gift cards, business checks, or personal checks to either pay for merchandise or services, or to receive legal currency by cashing counterfeit checks or money orders.
Criminals may use counterfeit checks or money orders to purchase online auction items. They typically issue the check or money order for an amount much greater than the final agreed price. When the seller receives payment from the buyer there are usually instructions for the seller to cash the check or money order and return the extra money back to the buyer with the auctioned item.
A counterfeit check or money order that is deposited into a financial institution is usually not detected as counterfeit until several days after the bank receives such item. Unfortunately it is the bank customer’s responsibility to repay the bank any currency that was withdrawn or received from the counterfeit check or money order.
Tips to Prevent Counterfeit Payment Fraud
Only accept money orders, cashier’s checks, or personal checks for the amount agreed to for online purchases or auctions.
Check to see that any signature on checks or money orders is signed in ink and not printed onto the check.
Contact the financial institute on which the check or money order was drawn to ensure the account and name for the account does exists.
Inspect checks and money orders for misspelled words, deletions, or other alterations.
Verify that money orders have a visible Benjamin Franklin watermark and a visible, vertical security strip.
If there is suspicion that a check or money order is counterfeit take such item to a financial institution to have it verified. A financial institution may take a few days to verify authenticity but there is no rush to mail a buyer an item or currency if there are suspicions about the payment.
Counterfeit money orders/cashier’s checks: These items are usually scanned and replicated via readily available computer software and hardware. However, like today’s U.S. currency, money orders and cashier’s checks issued from banks and post offices have security features on each to deter counterfeiting.
Credit cards/gift cards: Criminals are removing the original digital information from credit cards and gift cards and replacing it with stolen credit card information. It is not uncommon for these criminals to make large purchases using stolen credit card information and then return the purchased items for either a cash refund or gift card refund.
Business checks/personal checks: Blank check stock is easily available for purchase on the Internet. A counterfeit criminal can easily copy a victim’s banking information (account number and routing number) and make counterfeit checks to use for look-alike payroll checks or personal checks to be used for consumer purchases.