Remote Deposit Fraud Used in Advance Fee Scam

How crooks use remote deposit to pay-in dud checks: Internet Scambusters #868

Using your cell phone to scan and bank checks — remote deposit capture, as it’s called — may be a great consumer convenience, but it’s also a weapon used by scammers.

They use the tactic to deposit dud checks into victims’ banks and then ask them to wire back part of the sum. It’s an advance fee scam.

We’ll tell you how it works in this week’s issue, plus the five actions you can take to avoid getting caught out.

Let’s get started…


Remote Deposit Fraud Used in Advance Fee Scam


Have you ever used remote deposit capture (RDC)? You may not know the term, but it describes the process of using your phone to deposit a check into your bank account.

You simply use the camera on your phone to scan a check using an app from your bank or payment services provider like PayPal.

Also known as mobile deposit, it’s one of the fastest growing forms of financial technology, with usage almost doubling every year. After all, it saves you making a trip to the bank – and these days we’re all looking for ways to save time.

But, sadly, it’s also an increasingly common source of fraud. For example, a crook might scan a check you gave them into an account and then cash the same check before the transaction is identified.

A study by Guardian Analytics reportedly found that three-fourths of all mobile-related banking fraud was caused by RDC scams.

In addition, it’s also even possible any of us could accidentally scan and deposit the same check twice, raising banks’ suspicions about your honesty as a customer. And you may have to pay a returned check fee of $30.

A further vulnerability happens if you don’t store your mobile deposit checks somewhere safe, making them potential targets for thieves.

Advance Fee Fraud

But the most alarming scam from a consumer perspective is the use of RDC for a type of advance fee fraud.

Advance fee scams have been around for years. A crook sends you a dud check as an upfront payment for a product or service then gets you to wire back part of the payment before the check is found to be a fake.

In this latest variation, the crook actually deposits the fake check into your account himself.

How? As with all advance fee scams, he convinces you that the opportunity or product he’s supposedly selling — notably a job or a loan — are genuine.

But he wants to give you your money upfront, so he says he needs your bank account details so he can pay it in. He sends the bank the image of the fake check and then immediately asks his victim to return part of the money.

As one Indiana credit union recently warned customers: “Scammers trick their victims by promising them anything from love to jobs to loans to free money in exchange for their information.

“The scammer may simply ask for your online banking information if you already have it set up or the scammer may request your account and personal details that they will then use to set up an online banking account.”

The trick is commonly used in work-from-home job scams, where the crooks deposits the check as a supposed advance payment and then asks victims to forward a payment to a supplier of some sort. In reality, the scammer and the supplier are one and the same.

Another common usage is a loan scam. The victim applies for a loan and the scammer tells them he’ll deposit the money via RDC directly into their account. He does that and then asks them to wire a fee or other charge.

All advance fee scams work on the principle that the fake nature of the check takes some time to be identified, by which time the victim has received their wired payment and disappeared.

The problem for banks is that some of them lack the technology to spot and prevent these scams, yet they still have to accept remote deposits because their competitors do. That makes the situation a golden opportunity for scammers.

Actions You Can Take

Here are five key actions you can take to thwart thieves and scammers.

To avoid theft:

1. Store your deposited checks securely.

2. Ask your payer (provided it’s someone you trust) to deposit your payment electronically instead of sending a check.

To avoid advance fee fraud:

3. Don’t give out your confidential bank information to anyone you don’t know and trust.

4. Of course, in some cases, the crooks already have your details, stolen or bought on the black market. So, never send a payment as a refund from an advance fee until the check has cleared.

5. Anyway, you should never wire money, which can’t be traced, to someone you don’t know or trust, no matter how convincing their story – and they can be very convincing.

The bottom line is that if someone sends you a check or uses remote deposit to pay you, and then asks you to wire part of the sum to a third party, it’s 99.99 percent certain it’s an advance fee scam.

Alert of the Week

Several supermarket chains are reporting the appearance of ads on Facebook offering $80 coupons to shoppers – in return for personal financial information.

As highlighted in today’s issue, scammers often seek bank account details in order to perpetrate fraud.

Let’s be clear: No supermarket chain is giving away $80 and, certainly, no chain would ever ask you for your bank account details in return for a coupon. So just ignore this wicked come-on.

Time to conclude for today — have a great week!