Counterfeit Check Scams: Protecting Law Firms During Cybersecurity Awareness Month
Counterfeit check scams continue to threaten the legal profession, targeting law firms with increasingly sophisticated financial fraud tactics. As October marks National Cybersecurity Awareness Month, it’s an essential time for Illinois attorneys to evaluate their risk exposure, particularly when handling trust accounts and client funds.
On October 8 of last year, the FBI issued a public service alert (I-100824-PSA) warning of a rising trend in counterfeit check scams that specifically exploit law firms engaged in collections, real estate, and family law matters. The consequences can be severe, often resulting in irreversible financial losses from trust account disbursements.
This blog outlines how counterfeit check scams operate, what variations are emerging, and how Illinois legal professionals can stay ahead of evolving threats.
How Counterfeit Check Scams Target Law Firms
These scams typically begin with a fraudulent client inquiry that appears legitimate. The scammer presents a credible scenario, such as a debt collection dispute, and quickly secures the firm’s engagement. Once the attorney sends a demand letter to the alleged debtor, the fraud accelerates.
Here’s how it unfolds:
A law firm is contacted by a client seeking assistance in collecting a debt.
The firm agrees and sends a demand letter to the alleged debtor.
The debtor promptly sends a cashier’s check, appearing to resolve the matter.
The firm deposits the check in its client trust account.
Believing the funds are secure, the firm wires the proceeds (minus fees) to the client.
Days later, the bank flags the check as counterfeit and debits the trust account.
The firm is left responsible for the entire amount, having already disbursed the funds. These scams rely on timing, false legitimacy, and the presumption that cashier’s checks are inherently trustworthy.
Variations in Counterfeit Check Scams
While the structure of the scam is consistent, fraudsters often adapt their stories to avoid suspicion. In one common variation, the fraudster claims to be collecting a personal debt from an ex-relative, using generic names to increase the likelihood of plausibility. Another variation involves a business-related dispute, such as a workplace injury or unpaid invoice, often referencing a legitimate global company to disguise the deception.
Many scams involve foreign checks drawn from legitimate Canadian banks, which slows down verification and increases the likelihood that the law firm will disburse funds before discovering the fraud. In some cases, the client claims to be based overseas, which is used to justify delays in communication or unusual instructions. Each version of the scam exploits expectations of professionalism, clear communication, and prompt resolution that attorneys are accustomed to in legitimate matters.
Warning Signs of Counterfeit Check Scams
Law firms should remain vigilant for the following red flags:
Engagements involving foreign clients or cross-border debt collection
Sudden cooperation and quick settlements from the alleged debtor
Pressure to disburse funds rapidly or follow instructions strictly by email
Checks that take longer to clear due to foreign origin
Clients who avoid phone communication or cannot provide verifiable identification
Treating any engagement that involves handling funds with caution is essential, especially when the client is unfamiliar or from an international location.
Practice Steps to Protect Your Firm During Cybersecurity Awareness Month
October is the ideal time for Illinois law firms to reassess their internal safeguards. To defend against counterfeit check scams, firms should place holds on all deposits until the funds are fully verified by their bank. They should implement two-factor verification, including phone confirmation, before sending wires to any party. Staff members at all levels should be trained to recognize the signs of fraud and know how to escalate concerns internally.
Additionally, firms must thoroughly research and verify all client credentials and assess the legitimacy of financial claims before accepting an engagement. Secure banking practices, including transaction alerts on trust accounts, should be standard. If fraud is suspected, the firm should immediately contact its bank to request a wire recall or account freeze and report the incident to the Internet Crime Complaint Center (IC3) at www.ic3.gov. Being proactive is essential. Cybercriminals continue to refine their methods, and lawyers must adapt in turn.
Why Counterfeit Check Scam Awareness Matters
According to the FBI, these scams persist because they work. Trust account fraud, even when stemming from a third-party scam, can expose attorneys to professional liability claims and disciplinary action. Once funds leave the account, recovery is unlikely.
As part of National Cybersecurity Awareness Month, ISBA Mutual encourages firms to take immediate action. Cybersecurity is no longer limited to firewalls and passwords. It covers financial practices, client intake procedures, and the verification process for every transaction.
Illinois attorneys who understand the mechanics of counterfeit check scams and implement clear policies will be far better positioned to protect their clients, their trust accounts, and their reputation. Take the opportunity this October to evaluate your firm’s exposure and strengthen your defenses against cyber-enabled financial fraud.
To find the right coverage for your Illinois law firm, contact ISBA Mutual to learn more about our cyber liability insurance program.
