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<p><a href="/why-you-should-stop-sending-checks-in-the-mail-especia-1850543113" rel="noopener" target="_blank" title="open in a new window">Paper checks</a> are going the way of the dinosaurs—and fast. Only <a href="https://www.washingtonpost.com/business/2023/09/15/paper-checks-who-uses/" rel="noopener" target="_blank" title="(opens in a new window)">about .05% of payments</a> are made by check these days, and as you might imagine most of those are written by older folks, because habits die hard. Checks are dying so hard that 44% of Generation Z (the oldest of who are about 26 these days) <a href="https://financebuzz.com/financial-literacy-by-generation" rel="noopener" target="_blank" title="(opens in a new window)">don’t even possess a checkbook</a>.<br></br></p><p>But <em>dying</em> doesn’t mean <em>dead</em>, and <a href="/why-do-personal-checks-still-exist-1846338024" rel="noopener" target="_blank" title="open in a new window">paper checks still pop up</a> in your life from time to time. Sometimes they even pop up without warning, turning up in your mail as a nice surprise, like a tax refund check or a settlement check from a class-action case you forgot you were involved in. Usually, getting any sort of money in the mail would be cause for celebration, but checks can be vectors for scams as well as legal-but-unethical maneuvers. Here are five checks you should never cash if one lands in your mailbox.</p><h2>Prizes with a catch</h2><p>One of the most obvious checks you should immediately shred is a payout for a <a href="https://consumer.ftc.gov/articles/fake-prize-sweepstakes-lottery-scams" rel="noopener" target="_blank" title="(opens in a new window)">sweepstakes or contest</a> you don’t recall entering—especially if it’s accompanied by instructions to pay taxes or fees on the “prize.â€ If there are taxes on a legitimate cash prize, you pay them at the same time you pay any other tax—by claiming the income. If you’re directed to pay a fee for a check you’ve already received, it’s a scam.</p><h2>Overpayments</h2><p>If you sell something, perform a service, or are otherwise owed money and someone sends you a check for more than the amount agreed, be wary. If they then tell you that they made a mistake and want you to send them a refund for the extra cash, that’s because it’s fake. This is a <a href="/why-you-can-t-always-trust-a-cleared-check-1849740309" rel="noopener" target="" title="open in a new window">common scam</a> that relies on rules that require banks to fund a deposited check relatively quickly—meaning the money appears to show up in your account—despite the fact that it can take days or even weeks to process the check. When the bank figures out that the check is fake, it takes the money back—including the portion you sent back to the scammer.</p><p>Even if it’s not a scam, any check for an amount larger than you expected shouldn’t be cashed. If the IRS refund is bigger than you expected, or if your bank or a business makes an accounting error and overpays you, the overwhelming odds are that the mistake will eventually be noticed, and you’ll be required to pay it back. If you spend the money in the meantime, you could have a real problem on your hands.</p><h2>Paid in full</h2><p>If you’re owed money and someone sends you a check for some of the money owed, that’s generally a good thing—at least they’re making an attempt to pay you. But if the check is marked “paid in fullâ€ or has language about being a “full and final settlement,â€ be wary. The laws vary depending on your location and can be <a href="https://www.lawyers.com/legal-info/consumer-protection/banking-and-loans/paid-in-full-check-memo.html" rel="noopener" target="_blank" title="(opens in a new window)">kind of inconsistent</a>, but it is entirely possible a court would see this as a binding acceptance of a settlement. In other words, if you’re owed $1,000 and someone sends you a check marked “paid in fullâ€ for $500 and you cash it, that could be interpreted as agreeing to accept only half what you’re owed. The ploy might not work, but to save yourself time and trouble, return that check with a polite request for the full amount you’re owed.</p><h2>“Contractâ€ checks</h2><p>Here’s a scenario: You receive a check for a small amount of money, with language indicating it’s a rebate of some kind. You endorse the check and deposit it. A few weeks later, you notice some new charges draining money from your bank account, and after investigating you discover that by signing the check you’ve signed up for a scammy—but legal—service.</p><p>It <a href="https://www.doj.nh.gov/consumer/dont-cash-that-check/disguised-contracts.htm" rel="noopener" target="_blank" title="(opens in a new window)">sounds crazy</a>, but it <a href="https://consumer.georgia.gov/consumer-topics/unsolicited-checks" rel="noopener" target="_blank" title="(opens in a new window)">can happen</a>. If you pay attention, you’ll notice a tiny contract printed above the endorsement line on the back of the check that states what you’re agreeing to if you accept the money. Always be wary if there’s a block of text there, and read it carefully before accepting apparently “freeâ€ money.</p><p>Another form of “contract checkâ€ is an insurance settlement check with a <a href="https://hollingsworthlawfirm.com/your-company-sends-you-a-check-after-being-hurt-on-the-job-should-you-cash-it/" rel="noopener" target="_blank" title="(opens in a new window)">waiver notice</a>. Most settlement checks from insurance companies include this notice, which is legally binding. If you endorse the check, you essentially agree that the amount you’ve received is all you’re owed, and often you’ve also agreed to waive your right to sue or pursue any further action on your claim. If that’s your understanding, that’s fine—but read the waiver notice carefully before you cash that check, and if it doesn’t sound right, don’t deposit it.</p><h2>Stale checks</h2><p>Finally, there are checks that aren’t scams or secret contracts that can still cause you a lot of trouble: stale checks.</p><p>All checks are dated. Generally, if a check is more than six months old, it’s considered an outdated check—but some checks also have explicit time frames printed on them—for example, “Not valid after 90 daysâ€ or something similar. If the check can be considered stale, your bank has no obligation to process it—they <em>might</em>, but they might refuse it. It’s up to the bank.</p><p>But if you receive a stale check, you’re better off requesting a fresh check. If your bank allows you to deposit it, the issuing bank might not honor it, and the funds will vanish from your account—and you could be 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.</p>
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