Posted by Mike Smith :: October 10, 2007 @ 6:53 am

It’s not often that a new consumer protection campaign hits you from multiple angles, but that’s exactly what happened to me over the past few days. I first heard about the campaign on Bob Sullivan’s blog late last week, and planned to write a post on the subject. Then the TV commercials hit over the weekend.

The topic of this new campaign is check fraud. It attempts to inform consumers about the most common types of scams in this realm and specifically Internet based scams, which use cashier’s checks at the center of the attack. As Bob Sullivan’s post says, “Consumers seem to think cashier's checks, which come emblazoned with bank logos, are as good as cash.” The sad truth is that criminals exploit this inflated level of consumers’ trust toward cashier’s checks.

The new consumer education campaign is being run by the United States Postal Inspection Service. In addition to a new consumer education website at fakechecks.org, the campaign is also running a series of television advertisements. I saw a few of their ads during coverage of the baseball playoffs over the weekend. The commercials show scams that you would likely never fall for in person, such as someone on a city bus telling you that you’ve won a foreign lottery. The ads all end by saying that “Scams like these don’t work as well in person. That’s why they’re done online.” Seeing the ads, you realize how true that statement really is.

The companion website allows you to watch video scenarios of the most common types of check fraud scams. Just like the television commercials, the website mixes humor with the subject matter to make it more entertaining. You can then learn more about each type of scam and watch interviews with actual victims. You can also take a quiz to see if you would be tricked by the common practices used in these scams.

While each of the types of scams have different stories to get you hooked, they generally all have a common trait: Scammers present you with a check that you are supposed to cash and then wire a small portion of the check back to them. After the proceeds from the check are deposited in your account, you may feel confident that the check was legitimate and happily wire a portion of the check back. Unfortunately, it can take much longer for a fake check to be identified than the time it takes your bank to credit funds to your account. By exploiting this timing discrepancy, criminals receive money from you before you know that the check they sent you was a fake.

Here on the Lending Club blog, I often advocate education as the best means of consumer protection. By using multiple channels to reach potential victims, the US Postal Inspection Service is doing a great job at educating consumers about the dangers of check fraud. I am certainly impressed by their efforts and urge you to visit their website to become better informed about the subject. When you have some money you are looking to put to work for you, always go with a legitimate enterprise such as investing in P2P loans on Lending Club, as opposed to a questionable offer from an unknown party that looks too good to be true.