Counterfeit Checks in Real Estate Transactions
Unfortunately, counterfeit check scams are a type of fraud prevalent in many industries, especially when high transaction values are involved.
In recent years, counterfeit check scams have become more commonplace in real estate transactions. In fact, the FBI has noted that real estate scams have risen exponentially.
As a result, real estate professionals are quickly beginning to see the advantages and benefits of using a money transfer platform since scams involving counterfeit checks are almost always explicitly designed to target real estate agents and title agencies.
One way to minimize the risk of fraud during real estate transactions is to use a secure money transfer platform, such as paymints.io. Money is sent electronically in an encrypted format, is easily tracked, and eliminates the need to share personal banking info.
How Does a Counterfeit Check Scam Work?
A counterfeit check scam begins when a person contacts a real estate agent and expresses interest in a property.
The individual usually claims to be out of state or even in a foreign country and says they want to pay by personal check, cashier’s check, or money order.
The individual then sends you a check for more than the asking price and asks you to wire back the overpayment. If you deposit the check into your bank account, the check will probably clear. But that doesn’t mean it’s a legitimate check. The check is actually fake, and it can take weeks for an issuing bank to realize it.
And by the time you find out, you’re already out the money you wired back to the buyer.
How to Spot a Counterfeit Check Scam
Of course, plenty of legitimate real estate transactions occur with international buyers or buyers who are otherwise unable to meet the real estate agent in person.
But any such transaction should always be scrutinized since this is the primary means to initiate a counterfeit check scam.
In case you’re dealing with a fraudster offering to pay by check, the check the individual presents will appear to be a cashier’s check, personal check, or money order from a legitimate financial institution. However, these checks are fake and will not be honored by the financial institution.
Several red flags can indicate a counterfeit check scam.
First, the check is usually for a much larger amount than the asking price. It may have minor discrepancies, such as a misspelled name, incorrect address or PO box, and it may be made out to “cash” or “bearer.” Finally, the fraudulent check may have strange watermarks, check numbers, or security features not normally found on legitimate checks.
If you receive a suspected counterfeit check, you should not deposit it into your bank account.
Tips to help you avoid fake check scams
You can take several steps to avoid becoming a victim of check fraud. As a general rule, and whether you suspect fraud or not, you should never accept a check for more than the purchase price.
Scammers know all the laws, loopholes, and strategies they can employ to trick real estate attorneys and title agencies. Bold scam artists may even appear in person with real-looking credentials and eventually present a counterfeit cashier’s check. Such transactions usually occur directly between a buyer and a seller but can also target attorneys and title agencies.
Counterfeit checks have also been utilized for both good faith deposits and closing funds. The details always vary slightly, but the ultimate goal of the scam artist is to acquire a disbursement of funds before the checks are discovered to be fake.
Checks drawn from foreign accounts usually take more time to clear, which is why they’re a favorite of scammers. Waiting for the check to clear allows the scammer more time to try to acquire funds from the trust account before anyone can determine that the check is actually not valid.
Never accept a check for more than the selling price, no matter how tempting the offer or how convincing the story is.
Beware of buyers who insist you wire back money after they’ve sent you a check. Wiring money is like giving cash — you can’t get it back once it’s gone.
Consider using an online payment service instead of accepting a check. Earnest money services and platforms like paymints.io provide protection against fraud.
Know your rights if you accept a check as payment.
What to do if you become the victim of a fake check scam
Act quickly if you become a victim of a fake check scam. If you think you’ve received a fake check, don’t deposit it. Instead, take it to your bank and ask them to examine it.
If the bank confirms it’s fake, contact law enforcement to report the incident. You can also contact your state’s attorney general or the FTC and report the scam to the U.S. Postal Inspection Service.
Report fake checks via the official website of these federal agencies or their toll-free phone numbers:
FTC: Toll-free phone number: 1-877-FTC-HELP
U.S. Postal Inspection Service: Report fraud by mail online.
International frauds can also be reported via econsumer.gov, a partnership of more than 65 consumer protection agencies around the world.
Protect Yourself With a Money Transfer Platform
Using a money transfer platform eliminates many risks of falling victim to a counterfeit fraud scam. It also protects against other fraudulent actions undertaken by cybercriminals and hackers. Many real estate professionals already favor paymints.io in lieu of checks and other wire transfer options, not just for the safety factor but also because it saves time and money and is compliant with financial institutions.
Paymints.io is an intuitive money transfer platform that takes the outdated wire transfer model to the next level. The platform makes it easy and convenient for buyers to send funds for earnest money, real estate transaction fees, and closing costs. Real estate professionals can request money for fees in an instant, and the buyer can send them immediately, serving to eliminate the need to share banking information over email, which is also a vulnerable spot for hackers and cybercriminals to strike.
Schedule a free demo today to learn more about how this money transfer platform can benefit your business and all involved in a real estate transaction.