It seems safe because the money appears in their account -- it's only later that the check comes back as worthless. The victim must pay back the bank, and their own money is gone.
Ironically, the scam succeeds largely because of a federal law that is intended to protect consumers, not victimize them.
"By law, banks and credit unions must release at least part of a deposit whether the check is good or bad,'' says Melissa Morgan, chief retail manager for Patelco Credit Union. "Which is why you should only deposit checks from someone you trust."
Unfortunately, scammers have a way of making their victims trust them -- and the fact the check deposit appears as a real credit in their account only boosts a victim's confidence that the transaction is safe. Instead, the trap is set, and it snaps.
It happened in May to Tammy Geyerman of Concord, who thought she had finally landed a work-at-home job.
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"I was really excited. I told my father, I told my mother, hey, I got a job we'll have plenty of money we don't have to worry anymore."
A person identifying himself as "Joseph Davis" emailed her saying he found her resume online and after an "interview" conducted over a texting platform, he gave her the supposed good news.
"He said, 'Oh yeah, we're gonna hire you.' I was like, 'Oh! OK, cool,''' Geyerman said. Her new boss needed her to buy a computer,
"He said what we're gonna do is my company is gonna send you a check for $1,900," Geyerman said.
Sure enough, Geyerman received a $1,900 check and deposited it into her account at Patelco Credit Union. The money showed up in her account, and her balance more than doubled. Her supposed new boss told her to use it for that computer.
"And he tells me, 'OK, now I want you to put this person's name in your Zelle,'" Geyerman recalled, referring to the quick-pay app that links to her checking account. "... and send that person $900."
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She sent $900 through Zelle, then bought another $1,000 in Visa gift cards, sending the images to her supposed new employer. .
"I knew immediately the money would be gone but OK, it's their money so I wasn't too worried about it,'' Geyerman said.
Geyerman thought the $1,900 she saw in her bank account would cover the cost. What she didn't realize was, the money wasn't really there.
The job was fake, the check was worthless. And Patelco took the $1,900 back out of her account, leaving her account $830 in the red. Patelco said she had to pay that back too, or it would close her account.
"They said they were going to drain my account and I would be $830.06 in the hole. 'Oh, we're so sorry this happened to you and don't feel bad. It happens to dozens of people all day every day. It's not your fault,'" Geyerman said, recalling the response she got from Patelco. "But... now the bank was emptying my bank account. And I had nothing else to live on."
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"I felt like I had been victimized twice. I really did. I know it's not the bank's fault. And I'm not blaming them, I do understand why they did it. But I, I seriously felt like I was being victimized again," she said.
Geyerman didn't understand why Patelco let her spend the $1,900 before verifying the check.
Patelco said: it's the law.
"The law requires us to make these funds available on day one,'' said Melissa Morgan, of Patelco Credit Union. "At least some of the funds. That doesn't mean that that check can't still come back and reverse. So that's why if you don't know the person and you deposit a check, I would give it a week before assuming that money is good."
Morgan is referring to Regulation CC, a 1987 law saying banks must let you use at least part of your deposit right away -- even before the check clears, without knowing whether it's good or bad.
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The law is intended to stop banks from a formerly routine practice of putting long holds on checks. Often payroll checks could be held up, prompting complaints by consumers who needed their money.
Morgan said Patelco let Geyerman spend the entire $1,900 right away because she's a longtime customer.
"We can't put a hold on everyone's check,'' Morgan said. "There would be an outcry. Our goal is to make this money available to you right away. Some people live paycheck to paycheck."
And, she says, most checks are legitimate, so there's not a compelling reason to put holds on all checks. Instead, she says, consumers should be careful of deposits. If a check is returned as fake or worthless, the bank will reverse the credit, and could slap the customer with a returned-check fee.
Which is why she advises never to spend money before a check is cleared.
Scammers who give checks to their victims will tell them to send money elsewhere right away before they have the chance to find out the check is worthless.
"That's when an alarm should go off in your head right away if they've asked you to move that money,'' Morgan said.
"I really hope nobody ever falls for this scam,"' Geyerman said. "I should have listened to that little voice, it said it was too good to be true."
The law says for most checks, funds must be released within two days of a deposit. Some can take longer. If you get a check from a stranger, you can ask the bank if it seems real. However, bankers say it's generally impossible to say for sure whether a check is really good until it passes through the Federal Reserve system.
Take a look at more stories and videos by Michael Finney and 7 On Your Side.
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