I'm sure most of you have been scammed or have almost been scammed. If you have yet to experience either, I'm confident you will. That is why I'm writing this blog post for you, to help you avoid falling for one of the many scams out there.
Working in the banking world as long as I have, I've seen every scam under the sun. Even if you haven't heard of one or all of them, they've been around forever and a day. And, I'm not just talking about banking scams, but we will have a post on that soon.
There are several moving parts in these scams but I'm going to break down all of them so you're aware of what will happen in a situation like this.
Let's call the scammer Mr. X
Mr. X will reach out to you in several different ways. It could be from LinkedIn, Upwork, FB or another platform. They will send you a message saying they came across your profile and could use your services.
Typically they will offer you the job right then and there in the first message. Yup. Just right out of the gate. They'll give you a rundown of the services their needing and what the pay is. The messages will always have misspellings, typos, formatting issues, etc. Every single scam I've seen there is always a misspelling somewhere. Like, how do they not see that? I'm sure someone has had to of mentioned it to them at one point. I digress -- they will typically make up a reason as to why they cannot have a video chat or conference call with you. Some will go as far as saying they are having chemo, recovering from a heart attack, their spouse is in the hospital and everything in between. Sadly, they make stories up like this to pull on our heartstrings and make us understand why they can't talk to us.
They will offer prepayment or payment for you to buy equipment needed for the "job" and ask for your personal banking information or your address to mail a check. They'll ask you to send back the excess money they sent you. Usually, they'll ask you to send a gift card, money order or Western Union.
If you give them your personal banking information such as account number & routing number, that is all they need to initiate an outgoing transaction from your account or make fake checks tied to your account.
If they mail you a check, you deposit it, use what you need for the "equipment" and send them back the excess. A few days later the check will bounce. Let's say you had $1 in your account at the time of deposit and used that money to buy the equipment and return the excess, once that check bounces the bank will have to debit your account for that money that was spent. You are then 100% liable for bringing your account to a positive balance. Whether it's $100 or $10,000.
If you do have the money in your account to cover the bounced check, the bank simply takes that money -- you won't make payments to the bank.
But it was fraud you say? I know, and the bank knows that but you've spent money that you didn't fully have. Think of it as the bank giving you a $1,000 and Mr. X said he'd pay the bank the $1,000 back for you. Mr. X never pays and now you are responsible for that loan b/c your account was used. The money was given to you and you are the one that spent the money. I know. I know! It's not fair, but at the end of the day, you are responsible for the account and ensuring it's managed appropriately and has a positive balance. Before you say it, the bank does not have some magical powers that can detect a scam 100% of the time, all the time. There are common signs, but even those common signs can turn out to not be fraud. This is also why the bank probes you on the details about the check, who you received it from, etc.
Mr. X has now fallen off the face of the earth. But, occasionally they will stick around and try to convince you that it was just a mistake, their accountant didn't move the money where it needed to be and promise to make it right, but never does and then falls off the face of the earth.
Your bank account:
Again, you will be responsible for bringing your account back to a positive balance. The bank will freeze the account so no transaction can go in or out and they will open you a new account since the other has been compromised. On top of everything else you are dealing with you now have to change any auto-debits you had tied to your account (water bill, Netflix, etc), contact anyone who you paid via check who have not cashed the check yet, change your direct deposit information at work, etc.
Typically the bank will allow you to make payments to the account if it's negative a large amount. If you don't pay the balance that account will be charged off and reported to ChexSystems. ChexSystems is like your credit report for banking. If you try to open an account at another bank, they will pull your ChexSystems report and possibly deny you due to that outstanding balance you owe to another bank.
Eventually, this will be sent to a collection agency and placed on your credit report. Both ChexSystems & your credit report will keep this entry on record for 7 years.
Unfortunately, scammers are rarely caught. They've been doing this a long time. If by chance you do have legitimate contact information you can sue them, but this happens 0.0000001% of the time. You still want to file a police report in the chance that they are caught in the future and the bank will actually require you to do this and provide them with a copy.
Man, doesn't all of that suck? This was by far the worst part of being in banking. Seeing this happen day in and day out. Being a freelancer, entrepreneur, small business owner - whatever you call yourself can be hard enough on it's own let alone trying to avoid scammers. If it's too good to be true, it is. Ask a million questions, don't accept a job you just all of a sudden got without an interview. If you are just not sure, email me! Post in your FB business group. Do a little bit more due diligence, you'll be thankful you did if it is a scam and if it's not, you've covered your bases and can move on with the client confidently.
Lastly, this is just one of the most common scams in our industry. There are countless others. If this helped you let me know and maybe I can do a bi-weekly scam post. I'm here for you, let me know what you want to know! :)
You can get a copy of your personal ChexSystems report to see what, if anything, has been reported there. I recommend doing this once a year to ensure there is not a false entry on your report or identity theft.
>> This post is informational and educational only and is not legal advice, nor does it create a consultant-client relationship. Please consult your legal counsel for further
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