Counterfeit checks were created for my account. How does this type of fraud work?

Question

Two days ago, first thing in the morning I updated my quicken accounts and saw that my primary checking account had two unidentified checks totaling several thousand dollars, wiping out the account and generating penalties, etc.

I immediately went to the bank and spoke with my customer service rep. She pulled up the transactions and printed the check images. The account name/address info was mine, the bank's logo was correct, and the routing and account numbers were obviously mine. But the fonts and overall check design were not. It also had a logo (just above the 'date' line) of "National Park Foundation" and a line just below the spelled-out amount line - "Glacier National Park". The checks were printed, not hand written. On the back, the endorsement stated 'mobile deposit', but on different banks.

So my question is, does anyone know about this type of fraud and how it works? This is not the usual 'counterfeit check scam', where someone entices you to take their check, deposit in your account, then send some of the funds back to them. This is just out-and-out counterfeiting a check on someone else's account.

Answer 1

When this happens, your bank should give you your money back. Your bank will then recover the money from the bank that accepted the check, and that bank will then attempt to recover the money from whoever gave them the check.

You have found yourself on the other end of the usual counterfeit check scam. In this case, the counterfeit check that they gave to the other victim happens to belong to your account. The scammer forged a check from your account, gave it to another victim to deposit, and probably asked them for a portion of that money back as a refund. You'll get your money back, the other victim will need to pay back the money, and will probably be out whatever he sent directly to the scammer.

People are often under the mistaken assumption that when they are approached by a scammer to deposit a check and then send some of it back, that they could somehow "scam the scammer" by depositing the check and not sending any back. This question illustrates why that doesn't work. The scammer is not sending you any of his own money; he is sending you someone else's money, and you won't get to keep it.

This question also illustrates another question people ask, which is why it sometimes take a bank so long to figure out that a check you have deposited is fake. In this case, the other victim was given a check that was drawn on a real account. No one that was involved (except the scammer) had any way of knowing that the check was fake until our OP here noticed the problem on the account online. If he was waiting for a monthly statement to appear before checking his account, it would have taken even longer for everything to get straightened out.

Answer 2

This sounds like you were on the other end of a fairly common fraud scheme involving money laundering or outright theft. An Ars Technica writer nearly got caught up in the business end (emphasis mine)

The next morning, I checked my email and found the sign-on documents I'd been told to print out, sign, scan and return to the company. When I logged in to Google Hangouts, Mark told me that I'd begin my training period by editing a monograph on cancer treatment protocols using the company style guide. The files arrived, and I had been working for an hour or so when Mark informed me that the check for the equipment would be sent out via email shortly. Once it arrived, I'd need to print it out and then use my electronic deposit service to put it into my account.

Later

When the email with the check arrived it contained two image files. The image of the front of the check was in .jpg format, and the image of the other side was in .png. Upon inspection, the check was issued to me from St. Joseph's High School, which turned out to be a private Catholic girl's school, located in Southern California, a few miles from the biotech firm I was "working" for.

You will suffer no ill effects here. Neither will your bank. Nor the other bank. Most likely there's some poor sot who is now out a LOT of money. From the same article

In her article, Doyle notes that most job fraudsters rely on a tactic commonly known as "Remote Deposit Capture (RDC) Fraud." RDC scams are variations of an old-school confidence scheme that uses a fraudulent check and the victim's unwitting cooperation to access their bank account. The objective is to either draw cash against a fraudulent check, extract money from the victim's account, or both in many cases.

In most cases, the victim deposits the check via electronic means (in your case, it sounds like photo deposit, which is now ubiquitous). The bank gets the check and then credits their account for the full amount before anyone notices.

Unfortunately, the term “clear” sometimes gets used prematurely. An item has cleared only after your bank receives funds from the check writer’s bank. Bank employees might tell you that a check has cleared, and your bank’s computer systems might show that you have those funds available for withdrawal, but that doesn't necessarily mean you can spend the money risk-free.

Then the victim is directed to send the money onto the scammer via fungible and untraceable means (Western Union, gift cards, etc). Then the bank system catches on and pulls the money back, leaving the victim who deposited the check holding the bag.

If a check bounces, the bank will reverse the deposit to your account—even if you've spent some or all of the money from that deposit. If you don't have enough money in your account to cover the reversal, you’ll have a negative account balance and you could start bouncing other payments and racking up fees. Ultimately, you are responsible for deposits you make to your account, and you’re the one at risk.

Answer 3

This could be the simplest of all bad check scams. A con man finds out someone else's name and account number. He prints up some fake checks with this name and account number. Decades ago this was hard because professional printing equipment to make a believable-looking check was expensive and complicated. But today you can do this easily with a modern laser printer. Then he goes to a store, buys something worth, say, $1000, hands them a fake check for $1000, and walks out. Now he has merchandise worth $1000 and the store has a check that is worth nothing. Once he walks out the door, it can be almost impossible to track him down. Of course he doesn't give his real name and address, he gives the name and address of the account he used. As long as he's smart enough not to leave any clue as to his real identify, how would the police track him down? If he was stupid enough to have a product delivered to his actual home address, okay, but don't be that stupid.

Of course the scam could be something much more complicated. Unless the scammer is caught, it would be hard to say.

Answer 4

This is exactly the scam you mention, just this is the backside of it.

You are familiar with the scam where victim 1 is sent a "too large" check and asked to return some of the money via Western Union, Bitcoin or other irreversible means. The pretense varies: it's a purchase of a Craigslist item, or they are hired as an "account manager" to cash checks, etc.

Where do those checks come from? They are forged using account information of victim 2. In your case, they were trying to make you victim 2. This works for them either way:

• if you never notice the fake check, then they just did money laundering, and victim 1 wins and victim 2 loses.
• if you do notice the fake check, then they did a fake check scam, and victim 1 loses and victim 2 breaks even. The important thing is that you have given them a time delay, during which they got victim 1 to wire the money to them!*

Regardless, the scammers win, because victim 1 wired the money to them.

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* The way they used to do the time delay is by coding checks with extremely obfuscated routing numbers, that would take weeks to bounce. I gather banks have gotten wise.