The Federal Deposit Insurance Corporation (FDIC) has recently become
aware that counterfeit official checks supposedly drawn on insured
financial institutions throughout the United States are being used as part
of a scam to defraud consumers. Consumers and financial institutions have
sustained financial losses from unwitting participation in this type of
Through reports on counterfeit items forwarded to the FDIC by
individuals and financial institutions, the FDIC has put together the
following general outline of how the scam occurs.
The scam begins when an individual (seller), who has announced the
availability for sale of a large consumer item (car, large appliance,
etc.), receives an e-mail from a "buyer" offering to purchase the item. In
this scam, most of the sales announcements have been placed on the
Internet. The "buyer" tells the seller, either in the initial e-mail or
later, that payment will be made with an "official check" and may mention
that the check will be purchased by a third party, based in the U.S., who
owes the "buyer" money. All of the "official checks" used in these scams
have been counterfeit.
These "official checks" are made out for an amount greater than the
negotiated purchase price for the item. The "buyer" may mention the
discrepancy before sending the seller the check but, in some cases, has
not addressed the issue and the seller has asked about it. The "buyers"
have given various explanations for the discrepancy, including
transportation charges, import/export fees, or that the third party
mistakenly purchased the "official check" for an incorrect amount. The
"buyer" will then ask the seller to wire the excess funds to the "buyer's"
financial intermediary immediately after depositing the "official check,"
or will ask the seller to send a cashier's check in the amount of the
excess funds. The "buyer" will provide the seller with the required wire
transfer or mailing information. The "buyer" often will say that the funds
need to be returned immediately because of a family emergency (death,
The FDIC has received reports that a number of unsuspecting sellers
have mistakenly accepted a counterfeit official check as payment,
believing the item to be authentic. The seller will deposit the "official
check" into an account at his or her bank and instruct the depository bank
to wire the excess amount to the "buyer's" bank. When the funds are
transferred to the "buyer's" bank, the transaction is usually to or
through a U.S.-domiciled financial institution. The funds are usually
transferred again to a financial institution in Africa, the Middle East or
another part of the world.
Discovery that the "official check" is counterfeit usually occurs
before any funds are lost by the seller. Some counterfeit checks are of
poor quality and are rejected by the seller upon receipt. In other cases,
when the seller presents the counterfeit check to the depository bank for
deposit, he or she may ask bank personnel about the authenticity of the
"official check," or bank personnel may notice a problem with the check
and recommend calling the drawn-upon bank to verify its authenticity. Some
banks have advised sellers to wait several days to ensure that the
"official check" is paid by the drawn-upon bank before transferring the
excess funds to the "buyer" or otherwise using the funds. Financial
institutions should encourage their customers to verify the validity of
official checks before releasing any merchandise, transferring funds to a
third party or spending any of the proceeds.
The FDIC urges financial institutions to review Federal Reserve Board
Regulation CC - Funds Availability (12 CFR Part 229), which provides
guidelines and requirements concerning when deposited funds are to be
available to bank customers. Institutions are also encouraged to review
internal controls regarding funds availability to ensure policies and
procedures are adequate to limit exposure to financial and reputation risk
associated with this type of fraudulent activity.
Information about this scam may be forwarded to the FDIC's Special
Activities Section, 550 17th Street, NW, Room F-4040, Washington, DC
20429, or transmitted electronically to