'We believe it's real': My mom received a check from a class-action lawsuit. It bounced. Could this be a scam?

By Quentin Fottrell

'Now they are deducting that amount from her account'

"I handle my elderly mother's finances." (Photo subject is a model.)

Dear Quentin,

I handle my elderly mother's finances. She got a check in the mail for a class-action settlement and cashed it. It later bounced and now they are deducting that amount from her account. I believe this is a legitimate case of timeshare overcharging. We believe it's real. The bank photocopied the check so I read it. But mom has been advised to not cash any checks moving forward.

What can be done about reaching the settlement people to get this reissued?

The Son

Related: My second husband will leave me $540,000 if I bequeath him my $130,000 net worth. What will happen to my two sons?

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

If this was a legitimate check from a law firm giving your mother money for a class-action lawsuit, it would not have bounced.

Dear Son,

Are you sure this class-action check is legitimate?

Verify that before you do anything. You can do so by identifying the official class-action settlement administrator from the photocopy of the check. Do not call the phone number on the check, as it could be fake. Instead, look online to find the correct phone number. Contact the administrator and explain that the check was deposited but later returned unpaid.

If this was a legitimate check from a law firm giving your mother money for a class-action lawsuit, I suspect it would not have bounced. Your mother's bank would not want her to replenish the money they used to cover the cost of this check before it bounced. Even if your mother owns a timeshare, it does not make it real. It means the scammer got lucky.

Fake-check scams are often printed with the names and addresses and logos of legitimate companies and banks. "These scams work because fake checks generally look just like real checks, even to bank employees," the Federal Trade Commission says. They may even be real checks belonging to someone whose identity has been stolen.

Here's how such a scam might work: Your mother cashes the check for, say, $1,000. The money lands in her bank account. The check bounces after five days, and your mother is left on the hook. Your mother tries to find the company that mailed her the check, but it either doesn't exist or the company listed on the check says they never sent it.

Your mother cashes the check for, say, $1,000. It bounces after five days and your mother is left on the hook.

The FTC says it can actually take weeks before the bank discovers a fake check - but even if it takes days, it will usually be too late. A check can take anywhere from one to seven business days or more to clear. "By law, banks have to make deposited funds available quickly," the FTC says. "Even if you see the funds in your account, that doesn't mean it's a good check."

Who doesn't like "free" money? Millions of Americans have trouble making ends meet, and a class-action lawsuit check can feel like awfully good timing. People also fall for "truth bias" (who would go to so much trouble to create a fake check?) and "optimism bias" (people are essentially good, and good things happen to good people).

An "official bias" can also be persuasive. Letters, checks, emails and phone calls from supposedly authoritative organizations - banks, police, universities, Uncle Sam - can be intimidating and, if they're offering you something for nothing, impressive. We are more likely to comply with the request if there is a power imbalance and we feel wrong-footed.

Don't miss: 'I hope to retire early': I'm 56 and have 80% in a traditional IRA and 20% in a Roth. Am I in trouble?

Verifying an unknown check

"Bounced" is an umbrella term. The issuing bank may have rejected it due to a technical or administrative issue. The settlement administrator could have voided or stopped payment on the check. The best immediate action: Ask the bank for answers. They may be able to say there were "insufficient funds" or "suspected fraud" rather than give you a conclusive answer.

The Federal Deposit Insurance Corporation says there are several ways to help ensure that a check received in the mail is real. Receiving a check in the mail from an unknown source is the first big red flag. But let's assume that your mother was involved with an actual timeshare and there was an ongoing class-action lawsuit. She may be more likely to deposit the check.

A fake bank name is an obvious warning. "Check with the bank that supposedly issued the check to make sure it is real," the FDIC says. "Make sure you look up the phone number on the bank's official website, and don't use the phone number printed on the check that could be a phone number controlled and answered by the scam artist."

The settlement administrator could have voided or stopped payment on the check. Ask the bank for answers.

The FDIC advises consumers to call the bank to verify the check. "They will likely need to know the check number, issuance date and amount," it says. "Consider how and why you received the check. If someone you don't know initiated the payment, be skeptical and proceed cautiously. Scammers often communicate with their victims via email or text."

"Look where the check was mailed from," the FDIC adds. "If the postmark is not the same as the city and state of the 'supposed' issuing bank, it might be an indication the check is fake. Be especially cautious if it was mailed from overseas. Official checks usually contain watermarks, security threads, color-changing ink and other security features."

Call it the "congratulations! scam." The class-action lawsuit story is similar to the sweepstakes and lottery check scam: You are told you have won and/or been awarded money, and you can deposit this check in your bank account. If this is fake, report it to the Federal Trade Commission, the U.S. Postal Inspection Service and/or your state attorney general.

What's revealing about your mother's check is that two different generations believe it to be real. Seniors are targeted by scammers, if only because they're more likely to be at home if they're retired and perhaps are not as well versed in technology as younger generations. But the Pew Research Center reports that scams are common among all age groups.

If it is a scam, you wouldn't be the first ones fooled by a fake check.

Related: 'It's an expensive piece of equipment': My neighbor asked to borrow my snowblower. Do I say yes?

More columns from Quentin Fottrell:

'I feel overwhelmed': I'm 56 and only have $60,000 in my IRA. Is it too late for me?

'We're aiming for a monthly income of $11,500': I'm 64. I've $1.5 million in a 401(k). How do I time my withdrawals?

'I worked very hard': I'm 71 and have $6 million after scrimping and saving. My son, 33, wants money for a house. Do I say yes?

Check out The Moneyist's private Facebook group, where members help answer life's thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns.

By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.

By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

-Quentin Fottrell

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

04-29-26 0807ET