When you do business online, scam artists may pay you with a fraudulent check, resulting in the loss of a significant amount of money for your company. 

A recent attempt at this type of fraud almost cost one local business more than $100,000. 

These types of scams can work in many different ways, so you need to be vigilant. Here are a couple of examples of how the scams work:

A sales rep with ABC Co. receives an inquiry for a purchase via the company’s website. 

After a few days of emailing back and forth between the ABC sales rep and the prospective buyer, a check is sent, normally via FedEx or UPS, directly to ABC’s financial institution, accompanied by a letter “authorizing” the check to be deposited to ABC’s account. 

The financial institution deposits the check. 

Within a couple of days of the deposit, the sales rep receives an email from the purchaser stating one of two things: Either the check was for the wrong amount, resulting in an overpayment to ABC, or the purchaser has decided not to make the purchase. 

Either way, the purchaser requests that the overpayment or the full price be wired back from ABC. In some cases, the company that sold the product, as ABC did in this example, obliges. 

Within a day or two after the refund is sent, the original check is returned as counterfeit, and it is charged back to the selling company’s account, leaving the company saddled with the loss. 

Another example involves a law firm that is contacted to represent someone from outside the area in a local matter. 

After a few weeks of communication back and forth, the “matter” ends up being “settled” without further assistance from the firm. 

However, the “settlement” money is sent to the firm in what looks like a cashier’s check. 

The firm is instructed to take its contingency amount and wire the remainder of the settlement to the person who sought representation from the firm in the first place. 

A few days later, the settlement check the law firm received is returned as fraudulent. 

The law firm sometimes is out hundreds of thousands of dollars. 

Please use extreme caution when accepting checks for payment of any kind from individuals you are doing business with over the Internet. 

Remember, your financial institution may make funds available to you once you deposit the check. 

However, if you receive cash from the deposit or write checks based on the belief that the check you received from the “buyer” is backed up by funds at the buyer’s financial institution, you could be in trouble. 

If the check you received proves to be fraudulent, the amount of any funds you used from the fraudulent check will be charged back to your account, and you, too, will be the victim of a scam.

VP and information security officer, Bankers Trust Co.