Ed Sniffen, Senior Assistant Attorney General for the State of Alaska’s Department of Law Consumer Protection Unit, recently explained about a wave of fake check scams.
“This is the most common scenario,” said Sniffen. “An official looking envelope arrives with a check for $20,000. The letter says you’ve just won $3 million and all you have to do is wire $2,000 for taxes to claim the rest. Is this your lucky day? No. It is a fake check scam that will cost you thousands.”
Fake check scams come in many forms:
- You unexpectedly receive notice that you are getting a grant from the government or some foundation and a “processing fee” is required
- A company wants to hire you to work at home as a mystery shopper or processing payments and instructs you to send money as part of the job
- Someone sends you more than the asking price for an item you are selling and instructs you to wire the extra money somewhere else
- A stranger sends part of the profits you were promised in a foreign business deal and asks you to pay legal fees to get the rest
- Someone you meet online asks you to cash a check or money order as a favor
A reasonable person may assume that a bank would confirm that a check or money order is legitimate before letting you have money, but that is not the case, according to Sniffen. Ultimately, the responsibility of determining the legitimacy of a check rests on the consumer.
According to Sniffen, victims typically lose between $3,000 and $4,000.
So, what Alaskans can do to detect fraud?
Remember first of all, requests for payment to claim prizes are illegal. Real winners pay taxes directly to the government. Second, government agencies and foundations do not hand out “free” money. They usually provide grants for specific projects based on an extensive application process. Third, unexpected offers to make money in a foreign business deal are never legitimate. Fourth, companies that hire people to work from home do not ask them to send money. And fifth, scammers ask for payment through money transfer services because it is fast and hard to trace. Only use these services to send money to people you know and trust.
Sniffen discourages the use of wire transfer. “There are other ways to transfer money today – other than wire transfer. Once you wire money, it’s gone and it’s untraceable,” he says. “That’s why scammers want you to wire money. It’s a fast way for them to get their hands on your money – then they’re gone.”
What is Alaska’s Senior Assistant Attorney General’s advice when you receive the envelope that appears to be the answer to all your financial woes?
“Just throw it in the trash – or better yet, shred it,” Sniffen said. “It will save you thousands of dollars in the long run and you won’t be the victim of a scammer.”