The Rising Threat of Check Overpayment Scams: A Security Consultant’s Perspective

Posted on February 12th, 2025.

Fraud losses jumped by an alarming 70 percent from 2020 to 2021, according to recent reports from the Federal Trade Commission. More than 2.8 million people collectively lost 5.8 billion dollars to various forms of fraud in 2021, and checks remain a prime vehicle for scammers. As a security consultant working closely with small businesses, I have witnessed firsthand how overpayment scams exploit trust and urgency to trick unsuspecting owners into depositing fraudulent checks.

Many of these scams appear professional on the surface. Fraudsters send payment for more than the agreed-upon amount, then quickly request the extra funds back. This tactic can wreak havoc if you accept the check as legitimate. Banks often hold you liable once the check is discovered to be fake, which can result in thousands of dollars lost. Recent statistics indicate that 63 percent of checks are subjected to fraud attempts, and these crimes have nearly doubled between 2021 and 2022. Overpayment schemes often go hand-in-hand with other threats like Business Email Compromise, which exploits gaps in cybersecurity, especially at smaller companies with limited budgets.

Small businesses are especially vulnerable. We make up 99.9 percent of all companies in the United States, yet we are 14 times more likely to face cyber attacks than large corporations. More than 70 percent of small businesses experience fraud each year, and many never fully recover. The average cost of a single incident can exceed 200,000 dollars, a devastating blow for anyone operating with lean margins. About 60 percent of small enterprises that suffer a major hack or scam shut down within six months.

Freelancers and property managers are also at risk. Studies show that 30 percent of freelancers and one in four property managers encounter scam tactics, often involving overpayment requests and urgent refund demands. Nearly 40 percent of online sellers report fake offers that promise too much money and then ask for a quick return of the overage. These criminals rely on busy people not taking the time to verify details before depositing or refunding a suspicious payment.

Creating a culture of awareness is one of the most powerful defenses against scams. At my consulting firm, we encourage daily conversations about potential threats, from phony invoices to unsolicited emails that demand immediate action. Phishing attacks account for around 80 percent of cyber incidents at small businesses, so consistent training helps employees recognize red flags such as unusual sender addresses, odd requests for gift cards or cryptocurrency, and urgent subject lines.

Another effective strategy is to implement robust cybersecurity measures. Two-factor authentication can significantly reduce the risk of unauthorized access, while strong email filters and updated antivirus software protect against malware. Regularly changing passwords, monitoring bank accounts for suspicious activities, and confirming invoice details with trusted vendors are also essential steps. When dealing with any unexpected request for a refund or payment change, I advise verifying it through a separate communication channel. It may feel cumbersome, but it prevents criminals from using spoofed emails or impersonated phone calls to manipulate you.

Legal protections are available, though they vary by jurisdiction, and scammers often exploit loopholes or cross borders to complicate enforcement. Staying informed about new regulations and maintaining proper documentation help in the event you need to file reports with the authorities. The Federal Trade Commission and local law enforcement agencies encourage businesses to report fraud attempts promptly, since timely information sharing can disrupt organized groups that target multiple companies in the same region.

Adopting technology that automatically flags questionable checks and suspicious transactions can also make a notable difference. Positive Pay systems, real-time alerts for unfamiliar account activity, and advanced encryption for online transactions create extra layers of defense. In 2022, more than 63 percent of companies reported check fraud attempts, so automation that screens payments before final approval can significantly reduce losses.

Ultimately, none of these measures work in isolation. A fraud-resilient culture combines training, technology, regular internal communication, and the clear message that everyone in the organization is responsible for protecting the business. When employees understand how severe the problem is—especially with losses that can average 2,500 dollars per overpayment scam or climb to tens of thousands for larger transactions—they become more likely to question unusual requests instead of rushing to accommodate them.

If you believe your company has been targeted by a scam, it is critical to act quickly. Report the incident to the FTC or local police, keep a record of emails and financial transactions, and notify your bank. Early intervention can minimize damage and help investigators pursue the perpetrators. If you need hands-on support or guidance, feel free to reach out to my team at 720-507-7439 or email [email protected]. By remaining vigilant and proactive, we can work together to combat these scams and safeguard the financial health of our businesses.

Frequently Asked Questions

What are check overpayment scams?
A check overpayment scam occurs when someone sends a check for more than the agreed amount, then quickly asks for the difference back. When the check eventually bounces, the victim is left covering the loss.

How can we protect our small business from financial fraud?
Verification is key. Make sure to confirm all payments through separate communication channels, train employees to recognize suspicious requests, and use fraud prevention tools such as two-factor authentication and secure payment systems.

What impact does fraud have on small businesses?
Fraud can trigger serious financial harm, damage a company’s reputation, and disrupt daily operations. Around 70 percent of small businesses face fraud each year, and many struggle to recover once victimized.

How can we identify common scams targeting small businesses?
Stay informed about fake invoices, tech support scams, and check overpayment schemes. Scammers often use urgency and official-looking documents to trick busy owners into acting without proper verification.

What measures can we take to safeguard against check overpayment scams?
Employee education is essential. Encourage staff to be cautious with refund requests, verify check amounts with the issuer, and report any signs of suspicious activity. Maintaining strong internal controls helps prevent costly errors.

What signs indicate our business may be targeted by scammers?
Unexpected emails or calls about payment issues are red flags, especially if they demand immediate action. Requests for unorthodox payment methods, such as gift cards or cryptocurrency, also warrant skepticism.

How can we train our employees to be vigilant against fraud?
Provide regular updates on emerging threats, encourage open discussions about suspicious messages, and run simulations or workshops that teach staff how to spot red flags in emails or phone calls.

What should we do if we suspect our business has been targeted by a scam?
Report the incident to your bank, the Federal Trade Commission, and local law enforcement as soon as possible. Preserve all related communication, such as emails and transaction records, to assist investigators.

How can we build a fraud-resilient culture within our organization?
Emphasize that fraud prevention is a shared responsibility. Leadership should model best practices, promote clear communication channels, and reinforce the importance of verifying anything that seems out of the ordinary.

What legal protections are available to small businesses against scams?
Laws vary by region, but familiarizing yourself with fraud and identity theft statutes can help. Consulting an attorney about contracts and business practices can ensure you remain compliant and prepared for any disputes.

How can we utilize technology to enhance our security against fraud?
Tools like secure payment gateways, advanced email filters, and automated transaction alerts provide extra layers of defense. Implementing multi-factor authentication, encrypting sensitive data, and regularly auditing systems also reduce your risk of falling victim to scams.