Fake Check Scam Hitting Lawyers

By Rick DeBruhl, Chief Communications Officer
June 27, 2011

A Scam Aimed at Stealing Money from Lawyers is Surging Through Arizona Again

While the details vary, the basics remain the same. Sometimes the lawyer is contacted by someone who claims to want representation (often it involves a divorce or business settlement). At the beginning of the relationship, the lawyer is sent a check from the alleged client as a retainer. Shortly after the check has been deposited the client explains that he needs a portion or all of the money returned (sometimes because the bogus case "settled" before the lawyer had a chance to take action). The lawyer dutifully returns the money, only to find out that the original check has bounced and now the bank wants the funds returned.

So how does the scam work? Federal law says that when customers cash a check the funds must be made available, in most cases, within five business days. You deposit the check today, and the money appears in your balance tomorrow. However, that doesn't mean the check has cleared. That process can take weeks. Scammers count on the time between when the funds are "available" and the check has "cleared".

Who is the victim? In this case, it's the lawyer. The terms and conditions of their account at the bank say that deposits are subject to verification. When the check finally bounces, the bank goes back to the account holder and demands the money. By this time the scammer, who is likely in a foreign country, has disappeared and the lawyer is left on the hook. It's an even bigger problem when the lawyer's trust account is involved.

There are hundreds, if not thousands of versions of the fake check scams. Some involve overpayments, while others involve jobs or potential lottery winnings. Some scammers have figured out that by understanding the legal process, they can steal from lawyers.

Protecting yourself is easy. First, be cautious of any unsolicited checks or emails from new clients who claim to be working on a large settlement. Before returning any funds, verify with the bank that the check has actually cleared. Remember, it's not enough to see the amount show up in your balance. Don't assume that because a week or two has gone by that the check must be good. The scammers are good at what they do. Lawyers need to be especially cautious to avoiding becoming their next victim.

For more information about fake check scams go to:
www.fakechecks.org
www.ftc.gov