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Overpayment Scams

written by: •edited by: Brian Nelson•updated: 5/4/2009

This article explains how to recognize and avoid overpayment scams.

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    Introduction

    All overpayment scams have one feature in common. You are given a money order, cashier’s check, personal check or corporate check for more than the monetary amount you expected to receive. There are 3 possible results when a fake check or money order is deposited into a bank account:

    • The depositor gives the scammer real monies for the portion of the check that is more than the expected amount.
    • Monies are removed from the accounts of the depositor.
    • Identity theft.

    It is not always obvious that a check is counterfeit to a bank teller. In some instances, the bank issuing the check and the check account holder are legitimate but the authorized account holder’s signature was forged.

    When a check is deposited, the depositor, not the check issuer, is responsible for the funds. Don’t assume that when a check clears and the funds are made available to the depositor’s account that the check is valid or legitimate. It may take some time for your bank to be notified that the check is fraudulent. When this happens, your bank will want to be reimbursed for the amount they made available to the depositor’s account. The fraudulent check is returned to the issuing account holder with the depositor’s signature and banking information. If the check deposited was for an item you sold, you will not have the item returned to you. And, the monies you sent to the scammer are gone along with the monies your bank wants reimbursed.

    When an item is sold at an auction or through a classified ad, be cautious of the buyer who insists using an escrow service located outside your country and one you are not familiar with. If the escrow service is not mainstream or you aren’t comfortable with their terms of agreement or privacy policy, refuse to use that escrow service.

    Expect to receive--not that you necessarily will--a job offer as a financial representative from an international company when your resume is posted at a legitimate online employment website. The offer says the international company has difficulty accepting check payments from customers or clients in your country and needs help processing the payments by check. They typically offer 5% to 15% commission. They want you to deposit a fraudulent check and typically wire transfer an amount equal to the check minus your commission. They don’t mind if you wait for the check to clear because they know they’ll have your money before your bank find out their check was fraudulent. Now, the depositor has lost the amount sent back and has given the check issuer their banking information and signature.

    Overpayment scams can prey on your sympathies, logic or your need for fast cash. It doesn’t matter to the scammer what excuse you will believe to make you part with your hard-earned monies.

    Avoid overpayment scams. Don’t process financial transactions for any company or stranger through your personal accounts. And, NEVER return monies to anyone from a deposited check, especially by wire transfer.

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    3 Rules to Avoid Overpayment Scams

    Following these 3 simple rules will help individuals to avoid overpayment scams.

    • Always accept a check for only the exact amount expected. Don’t accept a check for more than the expected amount.
    • Never deposit a check with the understanding that you will return excess monies.
    • Never return excess monies, especially by wire transfer and to someone outside your country.

    Read more about overpayment scams at the USA Federal Trade Commission’s website. You can file a complaint with the Federal Trade Commission in the USA or with the RCMP in Canada. For a general review about scams, read this article.