What are the consequences of depositing a fake check?

If you don’t write or receive many checks — check payments account for just 8.3% of non-cash payments made — you may not think too much about the potential consequences of depositing a fake check.

But in 2018, check fraud resulted in $1.3 billion in losses related to bank deposit accounts — making up nearly half of all fraud losses associated with deposits, according to the American Bankers Association.

That’s even more than the $1.2 billion in losses attributed to debit card fraud.

The consequences of depositing a fake check can be serious, even if you’re the victim in the situation. In a typical fake check scam, victims lose $3,000 to $4,000. On top of that, you may have to pay costly bank fees or penalties.

Here’s how fake check scams work and what you can do to protect yourself.

• What is a fake check?
• What happens if I deposit a fake check?
• What are the consequences of depositing a fake check?
• Can I go to jail for depositing a fake check?
• How can I protect myself from fake check scams?
• Next steps: What to do if you’ve been a victim of check fraud

What is a fake check?

Fake checks can be difficult to identify. Because technology has advanced so much, people can produce fake checks and money orders that are difficult for consumers and even bank employees to identify as fraudulent.

In most fake check scams, the person will ask you to deposit or cash a check. Once you deposit the check, they’ll ask you to purchase gift cards or refund them a portion of the check amount.

When the bank later finds out that the check is counterfeit, you — not the scammer — will likely be held responsible for returning the money to the bank.

Scams are constantly evolving, but some of the most common ones will claim that …

• You’ve won a prize. Fraudsters may inform you that you won a “prize.” They’ll send you a check but ask you to wire money to cover taxes or fees. Of course, once you’ve paid the fees, it turns out the prize is counterfeit. Legitimate lotteries or sweepstakes will not ask you to return any of your lottery winnings for fees.
• You’ve been hired as an assistant or mystery shopper. Scammers may “hire” you as a virtual assistant or secret shopper. They’ll send you a check and ask you to use the funds to buy gift cards for them. After you send the gift cards to the scammer they redeem the cards, leaving you on the hook for the money spent when the check turns out to be fraudulent.
• You were overpaid. When someone purchases an item you’re selling, they may overpay you and ask you to refund the difference. After the refund goes through, you may find that they sent you a fake check.

How are these scams so effective? They can be very convincing. The fake checks may look like legitimate checks with appropriate watermarks, and they may appear to be issued by legitimate financial institutions. In some cases, they can be checks written from the accounts of identity theft victims who have no idea someone is writing checks in their name and withdrawing their money.

What happens if I deposit a fake check?

If you deposit a fake check, it can take weeks before the bank realizes that it’s counterfeit. The federal Expedited Funds Availability Act requires banks to make deposited funds available quickly. In many cases, funds deposited via check are available for withdrawal the next business day after being deposited. 

Your check may clear within one or two days, and you can withdraw the check amount, but that doesn’t mean the check is necessarily legitimate.

The bank may not find an issue with the check until the other bank returns it unpaid. It can be weeks before that happens — and in the meantime, you may spend the money because you thought it was available in your account.

Once the check is returned unpaid, the check will bounce — meaning it can’t be cashed — even if you didn’t know that the check was bad. And you’ll likely be responsible for repaying the bank the amount of the faked check.

What are the consequences of depositing a fake check?

The consequences of depositing a fake check — even unknowingly — can be costly.

• You may be responsible for repaying the entire amount of the check. While bank policies and state laws vary, you may have to pay the bank the entire amount of the fraudulent check that you cashed or deposited into your account.
• You may have to pay overdraft fees. If you’ve spent the check amount before the bank realizes it’s fake and debits your account for the full amount, it’s possible your account could get overdrawn. In that case, you could face overdraft fees, which average about $30 per transaction.
• The bank can close or freeze your account. If you deposit a fake check, your bank can decide to freeze or even completely close your account. Review your bank deposit account agreement to see in what scenarios your bank can close your account.
• It can damage your credit. If you have your bills linked to your checking account and the check bounces, you could miss your bill due dates. Your payment history is the single biggest factor credit bureaus use to determine your credit scores, so missed payments can damage your scores.
• You may have to pay late fees. If you aren’t able to pay your bills because of insufficient funds after cashing a bad check, companies may charge you late fees. For example, credit card late fees can be as high as $40.
• It can affect your banking history. If you have a history of depositing bad checks, checking account reporting companies like ChexSystems will record that information about you in its files about your checking history. Banks and credit unions may use that information to determine whether to allow you to open a checking account. If you have a poor banking history, they can deny your request.

Can I go to jail for depositing a fake check?

Going to jail for depositing a fake check may sound severe, but it can happen.

But whether you’ll face criminal penalties can depend on the laws in your state and if you cashed a bad check intentionally. If you are the victim of a scam and deposited a bad check in good faith, you’re unlikely to face criminal charges. But if you knowingly deposited a fake check, you might face fines and jail time. Here are a couple of examples.

• Florida — In Florida, cashing a worthless check with the intent to defraud is a felony. If convicted, you could face up to five years in prison.
• Pennsylvania — If you live in Pennsylvania and knew that the check you cashed would not be paid, you could be charged with a misdemeanor or felony. The charges depend on the check amount. For example, knowingly cashing a bad check for $1,000 to $74,999 will be treated as a misdemeanor, while doing the same for a check for $75,000 or more will be treated as a felony. The misdemeanor could result in a fine between $1,500 and $10,000 and jail time — up to five years. For the more serious felony, fines range from $2,500 to $15,000, and you could face up to seven years behind bars.

How can I protect myself from fake check scams?

Here are some things you can do to help protect yourself from check fraud.

• Verify the check with the bank. If you receive a check, contact the bank that issued the check to verify its legitimacy. Don’t call the number listed on the check — counterfeit checks often have fake numbers. Instead, look up the bank’s customer service number on its website.
• Check the amount. If someone owes you money and writes you a check, review the check amount. If it’s for more than what you’re owed, that’s a red flag.
• Don’t send money. There’s no reason someone would write you a check and then ask you to pay fees. If you’re asked to send money after receiving a check, you’re likely dealing with a scammer.
• Wait until the check is verified. While it may take weeks before the check is verified, it’s a good practice to wait to spend the funds until the bank has reviewed the check. It pays to be careful, especially if you’re getting a check from strangers. 

Next steps: What to do if you’ve been a victim of check fraud

If you’re the victim of check fraud or believe you may be, take action right away to protect yourself.

• Contact the bank. If you realize a check is fraudulent before your bank catches it, notify your bank right away. It may be able to stop withdrawals from your account or freeze it, if necessary.
• Report it to the Federal Trade Commission. File a report with the FTC. The FTC will give you a list of steps to take to protect your identity if it’s compromised.
• Submit a complaint with state and local consumer protection agencies. Report the incident to your local authorities, including your state’s attorney general.
• File a police report. In general, banks are required to reimburse customers for forged checks that withdraw funds from their bank accounts. But to qualify, you may have to file a police report with the local police department.