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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Summer 2005

Warning: Don't Be Fooled by Fake Checks

The FDIC wants to remind consumers that fraud artists are using counterfeit cashier's checks, money orders and other checks to trick victims into sending money. Many of these scams involve offers that arrive by mail or e-mail or that are in connection with Internet sales.

"The volume of fake checks reported to the FDIC in the last two years has increased dramatically," said Michael Benardo, manager of the FDIC's Financial Crimes Section. "The increase is due in part to crooks using advanced copying and printing technologies to produce authentic-looking counterfeit documents."

Here are examples of common scams:

  • You get a cashier's check in the mail along with a letter congratulating you for having won a lottery. Then you're asked to send money to process your claim or to provide confidential information to open an account at "their" bank to receive your winnings. If you don't remember entering the lottery, this is probably a scam aimed at obtaining your money or personal information that can be used to commit other frauds.

  • You receive an e-mail or fax from a stranger saying he or she can't get a large sum of money out of a foreign country because it has been "frozen" by the government. You're told that with your help—and money to pay up-front expenses or the temporary use of your U.S. bank account—the stranger will give you a check once the funds are recovered from abroad. Of course, the money you send will likely be gone, your bank account could be drained if you give them your account number, and any check you receive is most likely worthless.

  • You sell an item over the Internet and the buyer sends a money order for an amount more than the agreed-upon price. The buyer instructs you to wire the excess funds back. If you comply, you will most likely find out that the money order is phony and the money you wired cannot be returned to you.
  • In these examples, if you deposit or cash the check or money order it likely will not "clear"(be paid) when it is sent to the bank on which it is supposed to be drawn. And, the fraudulent check will likely be returned to your bank and charged against your account. Depending on the circumstances and your state's laws, you may be held responsible for the entire amount of the fraudulent check.

    In general, be very suspicious of offers that seem too good to be true. "Be smart and don't be tempted," said Benardo. "Stop and ask yourself, 'Why would someone I never met contact me for help getting money out of a foreign country? 'Why would a stranger send me a big check for no apparent reason?'"

    When in doubt, Benardo added, "it's usually best to walk away from the deal immediately."

    For more information about protecting against counterfeit checks, see a special report in the Spring 2003 FDIC Consumer News online at www.fdic.gov/consumers/consumer/news/cnspr03/index.html.

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    Last Updated 5/17/2005