There is a check cashing scam doing the rounds at the moment, which is taking a lot of people in, and proving very successful for the scammers. This scam is very convincing, so it is important that you understand how it works and don’t get taken in yourself. Here are the details.

The scammers will send you a very official looking notification letter in the post, informing you that you recently won an international sweepstake or postcode lottery with a huge payout, usually in the millions of dollars. Enclosed with the letter, there will be a cashier’s check for a much smaller amount (usually between $2,000 and $5,000), ostensibly to cover the government taxes on your winnings that need to be paid before you can receive the full sum.

The notification letter will instruct you to cash the check at your bank and to send the tax amount owing (via MoneyGram or Western Union money transfer) direct to their nominated “tax agent”.

Everything looks very official and above board, so you take the check along to your bank, cash it and transfer the money as instructed.

Of course, the check is counterfeit. However, your bank does not discover this fact for days or even sometimes weeks after the date you deposited it. When they do discover it is fraudulent, you are then liable to pay back to the bank the amount you withdrew against the check, because legally you are responsible as the person who deposited the check with the bank.

Meanwhile, the scammers have happily taken the money you wired to them and moved on to their next mark.

To avoid getting scammed in this way, there are a number of precautions you should take:

• never accept winnings for any contest you haven’t entered
• never wire money to anyone you don’t know
• never pay a “fee” to enable you to claim prize winnings

Follow these simple steps and you will be able to avoid this check cashing scam.