Recent years have seen the proliferation of different variations of what is often called the “Nigerian Check Scam.” This scam typically unfolds when someone, usually located outside of the country, fabricates a counterfeit check and asks a bank customer inside the country to accept the counterfeit check, deposit the check into his or her bank account, and quickly wire funds outside of the country in exchange for a portion of the funds. Another variation of the scam unfolds when a fraudster offers to buy an item that an individual seller inside the country has listed for sale on the Web. Instead of sending a check for the listed price, the fraudster sends a check for a substantially larger amount (providing some plausible reason a larger amount was mistakenly sent in the first place) and asks the seller to wire back the difference.
Individuals who fall victim to the scam usually deposit the check into their bank accounts and request the depositary bank to wire the funds to a specified account overseas. By the time the depositary bank receives notice that the check is counterfeit, it may be too late: the depositary bank has already irrevocably wired the funds out of the country. Under such circumstances, the individual customer may be liable to his or her bank. Banks, on the other hand, who fall victim to the scam may also be liable (or ultimately bear the loss) depending on how quickly the counterfeit check was discovered and what steps were taken by the bank to prevent the loss.
The growing problem of counterfeit checks has increased the need for attention to two issues. First, what basic preventive measures can banks and individuals take to avoid falling victim to the fraud? Second, assuming the passing of the counterfeit check was successful, who is generally liable for the fraud? This article discusses each of these issues.
