SoCal small business owner lost $14,000 in check washing scam

Phi Dang works at her family owned business selling small appliances to retailers. A vendor recently called her asking about a past due bill. 

“My vendor said, ‘Hey Phi, you didn’t pay this invoice yet,’” she said.

But Dang had paid the bill. And the check - $14,000 - had already cleared her bank account. But when Dang examined the check, she noticed the payee had been changed.

“And I said, ‘Oh, that’s not my handwriting,’” she said.

Dang pieced together what likely happened. A thief stole the check from the mail, used chemicals to alter the payee, and then took the check to the bank and cashed it. 

“I’m so nervous because that’s a lot of money,” said Dang.

Check fraud has exploded since the pandemic – up 365%, according to the U.S. Treasury Department. Those writing checks are losing millions of dollars, and many times, their banks aren’t doing much to help them. 

Dang said she reported the fraud to her bank, Wells Fargo, as soon as she learned what happened. But she said Wells Fargo told her she wouldn’t get her money back because she had to report the fraud within 30 days. 

“He kept telling me, ‘Do you understand what I'm saying? Your money is gone, your money is gone,’” said Dang.

Carola Sanchez-Adams is a senior attorney with the National Consumer Law Center. She said consumers often don’t learn they’re victims of check fraud until it’s too late. 

Checks are governed by state law through the Uniform Commercial Code (UCC), and the UCC says victims of check fraud have up to a year to notify their bank. 

But banks can shorten that time frame per their account agreements. And Sanchez-Adams says most of them do. She said many banks give you just 30 days to report fraud. 

“So it does put a lot of responsibility on us to say, ‘Ok, I'm sending a check in the mail,  to the tax assessor, and then I'm going to check and make sure that check was actually deposited and paid,’ as opposed to just believing that it will be,” she said. 

In a statement, Wells Fargo said it “empathized” with Dang. But it said all customers “must file a timely claim for any suspected fraudulent transactions.”

So bottom line, Dang is out $14,000.

Sanchez-Adams said it’ll take a change in state law to get banks to act differently. 

“I say if you're going to write a check, then you hand deliver who you’re writing it to. Don’t put it in the mailbox,” she said. 

Tips when writing checks:

• Hand deliver the check to the recipient.
• Check your bank account often.
• Look at the image of the cleared check, to be sure the payee or amount hasn’t been altered.