Check forgers use the information of legitimate companies or institutions to create very real looking checks.
I wrote about how fake checks showed up in a mystery shopper scam. They also show up in foreign lottery scams, check overpayment scams, Internet and Internet auction scams. In lottery scams, victims get a phone call or mail, telling them they won a foreign sweepstakes or lottery, but need to pay a processing, currency transfer, or insurance fee to move the money into the United States.
To help pay the fee, the scammers send a fake check, with instructions to cash it, and take the cash to a wire transfer service, and send it overseas to pay the fee.
Crooks also frequently reply to classified ads or online auction postings (think Craigslist), offering to buy the advertised items. They send a check written for far more than the purchase price. The scammer asks the seller to send the difference back by wire transfer after depositing the check. If the seller does as instructed, when the check bounces, the seller is left holding the bag for the entire amount.
In all these cases, the consumer will end up losing their money, not the bank. Why is that? The consumer may think, the check looked good, and the bank accepted it, why am I on the hook for the money?
Under federal law, banks must make the first $200 available to you the day after you deposit a check, and the rest must be made available the second business day after the deposit. But just because you deposit the check and the bank took it, does not make it good.
It can take a week or 10 days before a check is returned to your bank as counterfeit. In the meantime, you are responsible for any money you withdraw against that check.