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Thinking of selling a car or another valuable item through an online auction or your newspaper’s classified section? If so, it is important to be knowledgeable about check overpayment scams, one of the most common schemes, and how to avoid becoming a victim.

What is a check overpayment scam?
Check overpayment scams target consumers selling valuable items through classified ads or online auction sites. Unsuspecting sellers get stuck with a big loss of funds when scammers pass off bogus checks to pay for the item.

How do check overpayment scams happen?
A check overpayment scam begins when a scam artist replies to the classified ad or auction posting and offers to purchase the item for sale with a certified check (cashier’s, personal, or corporate). They often claim to be out-of-state, therefore, giving them an explanation of why they need to send a check.  

At the last minute, the so-called buyer (or the buyer’s “agent”) comes up with a reason for writing the check for more than the purchase price of the item. The buyer then asks the seller to wire back the difference after the check is deposited. The check the buyer sent is fraudulent, but this is often difficult to detect because they almost always send fraudulent certified checks. Since the check appears to be certified, the seller is able to cash the check and immediately wire the excess funds to the buyer.  

The check is eventually returned due to non-sufficient funds and the seller is then responsible for covering the amount of the check, the amount wired to the supposed buyer, and any non-sufficient fund fees incurred.

How can you avoid check overpayment scams?
The Federal Trade Commission (FTC) gives the following tips to avoid check overpayment scams:

• Know who you are dealing with – independently confirm your buyer’s name, address, and telephone number. Don’t trust emails alone. Some fraudulent buyers have used forged email headers that make follow-up difficult, if not impossible. Get the seller’s telephone number as another way to get in touch. Dial the number to confirm that it is correct. You may also ask for a photocopy of identification (i.e., a driver’s license or state I.D.) to verify their information.

• Never accept a check for more than your selling price.

• Never agree to wire back funds to a buyer – a legitimate buyer will not pressure you to do so, and you have limited recourse if there is a problem with a wire transfer.

• Resist pressure to “act now.” If the buyer’s offer is good now, it should be good when the check clears.

• If you accept payment by check, ask for a check drawn on a local bank or a bank with a local branch. You can visit that bank branch to determine if the check is legitimate.

• If you are concerned about a sent check being fraudulent, tell the buyer that you will not send the item they purchased until after the check has cleared.

• Consider an alternative method of payment, such as an escrow service or online payment service. If the buyer wants to use a service you have not heard of, be sure to check it out to be sure it is reliable – check its website, call its customer service hotline, and read its terms of agreement and privacy policy. If you do not feel comfortable with the service, do not use it.  

This type of scam, among others, can be very costly to consumers. Using common sense and staying alert can help derail these scam artists. If you think you’ve been targeted by a check overpayment scam, file a complaint with the FTC at: www.ftc.gov or by calling: 1.877.FTC.HELP (1.877.382.4357). For more information on buying or selling via an Internet auction site, visit: www.ftc.gov/onlineshopping.

Sources:
http://onguardonline.gov, “Spam Scams,” February 2008, http://onlineguard.gov/spam.html
http://www.ftc.gov, ”Check Overpayment Scams: Sellers Beware,” December 2004, http://www.ftc.gov/bcp/conline/pubs/alerts/overpayalrt.shtm
http://www.800helpfla.com, “FTC Warns About “Check Overpayment Scams,” December 2004, http://www.800helpfla.com/scams/check_overpayment.html
http://www.ftc.gov, “Internet Auctions A Guide for Buyers and Sellers,” March 2006, http://www.ftc.gov/bcp/edu/pubs/consumer/tech/tec07.shtm#scams
 

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