Table of Contents
Faster than ever, paper checks are becoming extinct. These days, checks only make up about 05% of payments, and as you might expect, the majority of them are written by elderly people due to behavioral issues. In fact, 44% of Generation Z, the oldest of whom are currently roughly 26 years old, don’t even possess a checkbook. because checks are getting too hard.
However, death does not mean death, and you will see the occasional paper check in your life. Sometimes they even appear out of the blue, like a tax return check or a settlement check from a class-action lawsuit you didn’t realize you were a part of, arriving in your mail as a pleasant surprise. Receiving any type of cash in the mail usually will While there may be reason for joy, checks can also serve as a conduit for dishonest business practices and legal but unethical activities. If one of these five checks shows up in your mailbox, you should never intercept it.
Prizes with a catch
Payouts for sweepstakes or contests you don’t remember participating in are the most obvious checks you should burn immediately—especially if they come with instructions to pay taxes or fees on the “prize.” If tax is applicable on a valid cash prize, you pay it by declaring the income as you would any other tax. If you’re being asked to pay a fee for a check you’ve already received, it’s a scam.
Overpayments
If you deliver a service, sell an item, or otherwise owe someone money and they give you a check for more than you agreed to, proceed with caution. If they claim they made a mistake and want you to refund them the extra money, you can be sure it’s a lie. This is a popular scam that takes advantage of rules that require banks to fund checks that are deposited fairly quickly, so the money appears to be in your account even though the check may take days or weeks to process. After the check is determined to be fraudulent, the money is returned by the bank, along with the amount you return to the con artist.
Checks that exceed the expected amount should not be cashed, even if they are not fraudulent. You may be forced to repay any overpayments made by your bank or company, or if your IRS return is higher than you expected because of an accounting error that caused the overpayment. Meanwhile, if you spend money, you may face a serious problem.
Paid in full
If someone writes you a check for part of what you owe, that’s a positive thing because it shows they’re trying to pay you. However, be careful if the check is labeled “paid in full” or contains words that refer to “full and final settlement.” It is possible that a judge may view this as a legally binding acceptance of the settlement, however the rules may differ depending on where you live. Otherwise, accepting and cashing a $500 “in full” check from someone who owes you $1,000 can be treated as accepting half of the amount due. Even if this ploy is not successful, save yourself
“Contract” checks
Here’s an example: A check arrives for a small amount and the text indicates that it’s some kind of refund. After the check is endorsed, you deposit it. After a few weeks, you notice that money is being taken out of your bank account through some new charges. Upon further investigation, you learn that the check you signed authorized you to participate in a shady but legitimate service.
Although it seems impossible, it happens. If you look closely, you will see a small agreement printed on the reverse of the check just above the pagination line outlining your responsibilities if you accept the check. If there is a writing block, always be cautious and study it thoroughly before getting “free” money.
An insurance settlement check that includes a notice of loan waiver is another type of “contract check.” This notification is legally binding and is usually included with settlement checks from insurance companies. Endorsement of a check constitutes a waiver of the right to assert or pursue any other action related to your claim, and effectively acknowledges that the amount paid to you is due to you. If you understand that, that is fine—but read the waiver notice carefully before you cash that check, and if it doesn’t sound right, don’t deposit it.
Stale checks
Last but not least, stale checks are not fraud or hidden contracts, but they can still land you in a lot of trouble.
Each check dated A check is considered expired if it is more than six months old; However, some checks have specific expiration dates on them, such as “not valid after 90 days” or something similar. Your bank is not required to process a check that is considered stale; They may choose to do so, but they are free to refuse it. Bank will decide.
However, if the check you received is proof, ask for a new check. If you deposit it into your bank, the issuing bank might not accept it, the money will disappear from your account, and you might on the hook for fees. If you know for a certainty that the check will be honored even though it’s old, contact your bank and understand their policies before you try to deposit or cash the check.
1 thought on “There are 5 check types you should never cash”