Scammers are constantly finding new ways to take advantage of digital banking and people looking for convenient financial solutions. Two scams that can be particularly damaging involve fraudulent mobile cheque deposits and fake online loan offers.
In one common scenario, a fraudster posing as an online lender convinces someone to provide their online banking credentials. The scammer then deposits a fraudulent cheque into the victim's account and quickly transfers the funds elsewhere—often through an e-Transfer, bill payment, money service business or cryptocurrency platform. The victim may believe they've received legitimate loan funds. But when the cheque is later identified as fraudulent, the money can be removed from the account, potentially leaving the victim responsible for the resulting loss.
The most important rule to remember: Never give another person your online banking username, password or security credentials.
Here's how these scams work, the warning signs to watch for and what to do if you think you've been targeted.
What is a “For Mobile Deposit Only” cheque scam?
Mobile cheque deposit is a legitimate banking service that allows you to deposit an eligible cheque by taking photos of it through your financial institution's official mobile banking app. The problem occurs when fraudsters use counterfeit, altered or stolen cheques as part of a broader scam. In one version of the scam, a fraudster advertises a fake online loan and asks the victim to provide personal information or online banking credentials. Once the scammer gains access to the victim's account, they may deposit a fraudulent cheque using mobile deposit and then move money out of the account. The cheque may initially appear to have been accepted, but that does not necessarily mean the cheque is legitimate or that the funds are permanently available. Financial institutions may place holds on cheque deposits while the cheque is being verified.
The important distinction
“For Mobile Deposit Only” does not automatically mean a cheque is a scam. The warning signs are the circumstances surrounding the cheque.
For example, be especially cautious if someone:
- Sends you a cheque unexpectedly
- Promises you money through an online loan
- Asks for your online banking credentials
- Tells you to deposit a cheque and send the money elsewhere
- Asks you to forward money through an e-Transfer
- Asks you to send funds to a cryptocurrency platform
- Tells you to act immediately
- Offers a loan without a reasonable application or verification process
How the mobile deposit cheque scam works
A typical scam may look like this:
Step 1: You find an online loan offer
You see an advertisement or receive a message offering fast financing, sometimes with promises of easy approval or minimal credit requirements.
Step 2: The “lender” asks for information
The scammer may request personal information, banking information or, in the most dangerous cases, your online banking login credentials.
Step 3: A cheque is deposited
The scammer deposits a fraudulent cheque into your account, sometimes through your mobile banking app.
Step 4: You're instructed to move the money
The scammer tells you to transfer some or all of the funds to another account, business, cryptocurrency exchange or other recipient.
Step 5: The cheque is identified as fraudulent
The financial institution discovers that the cheque cannot be honoured.
Step 6: You may be left dealing with the consequences
The money you transferred may already be gone, while the fraudulent deposit is reversed.
This is why you should never assume that money is yours simply because it appears in your account after a cheque deposit.
5 ways to protect yourself from cheque deposit scams
1. Know who sent you the cheque
Be suspicious of unexpected cheques, particularly when they arrive as part of an online loan, work-from-home opportunity, prize or investment offer. If you don't recognize the sender, don't assume the cheque is legitimate.
2. Don't give anyone your online banking credentials
This is one of the most important rules. Never allow an online lender, stranger or other third party to log into your online banking account for you. A legitimate financial institution should not require you to hand over your banking password so someone else can access your account.
3. Don't send deposited funds to someone else
A common fraud tactic is:
“Deposit this cheque, keep your portion and send the rest to us.”
Don't do it. If someone asks you to receive money into your account and then transfer it elsewhere, stop and verify the transaction independently.
4. Don't assume deposited funds are cleared
A cheque deposit may be subject to a hold or subsequent verification. The fact that money appears in your account does not necessarily mean the cheque is legitimate. Canada's Financial Consumer Agency explains that cheque holds can be used to allow a financial institution to verify whether the cheque is valid and whether the account it was drawn on is open and has sufficient funds.
5. Contact your financial institution if you're unsure
If you receive a suspicious cheque or think you've been targeted, don't try to resolve the situation with the person who sent it. Contact your financial institution directly using a trusted phone number or communication channel.
What are online loan scams?
Online loan scams involve fraudsters pretending to be legitimate lenders.
They often target people who are:
- Looking for quick access to money
- Trying to consolidate debt
- Dealing with unexpected expenses
- Concerned about their credit
- Looking for a loan despite having poor credit
Scammers may create professional-looking websites, advertisements and applications to make the fake lender appear legitimate. They may promise fast approval, guaranteed financing or unusually attractive terms. The goal isn't necessarily to provide a loan. It may be to steal your money, personal information or banking credentials.
6 warning signs of an online loan scam
1. The lender asks for your online banking login
This is a major red flag. Never provide your online banking password or allow a supposed lender to log into your account.
2. You're promised guaranteed approval
Be cautious when a lender claims that everyone qualifies regardless of their financial circumstances. Legitimate lending involves assessing the applicant and the loan.
3. You're pressured to act immediately
Scammers don't want you to have time to research the company or discuss the offer with someone you trust.
Be cautious if you're told:
- “This offer expires today.”
- “You must pay immediately.”
- “Your approval will disappear if you don't act now.”
4. You're asked to pay money before receiving the loan
Requests for unusual upfront payments should raise concerns. Before paying any fee, independently verify the lender, understand the terms and make sure you're dealing with a legitimate organization.
5. The lender requests excessive personal information
Be cautious about providing sensitive information before you've established who you're dealing with and why they need it.
6. The offer seems too good to be true
Extremely low rates, guaranteed approval, large loans with little documentation and pressure to act quickly should all prompt additional research.
The biggest red flag: someone wants access to your online banking
If a supposed lender tells you they need to log into your online banking account to:
- Verify your identity
- Confirm your balance
- Deposit your loan
- Set up repayments
- “Activate” your loan
- Improve your approval chances
Stop.
Do not provide your username, password or security code. YNCU currently uses Two-Step Verification (2SV) for online banking, adding an additional verification step to help protect members' financial information. Even with additional security controls, you should never give another person your banking credentials.
What should you do if you've already shared your banking information?
Act immediately.
If you gave someone your online banking credentials or believe someone has accessed your account:
1. Contact YNCU immediately
YNCU members should contact their financial institution as soon as possible if their banking credentials have been compromised or they suspect fraudulent activity.
2. Change your credentials
Follow YNCU's instructions for securing your online banking access.
3. Review your account activity
Look for unfamiliar:
- Transfers
- Bill payments
- Deposits
- Withdrawals
- E-Transfers
- New payees or recipients
4. Don't send additional money
If the scammer contacts you again, don't follow their instructions.
5. Report the fraud
The Canadian Anti-Fraud Centre recommends reporting fraud and cybercrime even when there has been no financial loss.
What should you do if a cheque has already been deposited?
If you suspect the cheque is fraudulent: Don't move or spend the money. Contact your financial institution immediately and explain exactly what happened. Don't attempt to “fix” the situation by sending money back to the person who sent the cheque. Your financial institution can advise you on the appropriate next steps.
How to spot a fake online lender
Before applying for an online loan, take time to research the company.
Look for:
- A legitimate business identity
- Verifiable contact information
- Clear loan terms
- Transparent fees
- A physical business presence where appropriate
- Independent information about the company
- A reasonable application and approval process
Don't rely solely on reviews displayed on the lender's own website. And don't assume that a professional-looking website means the company is legitimate.
Before you accept an online loan, ask these questions
Who is the lender?
Can you independently verify the organization?
What is the total cost of borrowing?
Look beyond the advertised interest rate and understand applicable fees and other costs.
Why do they need my information?
Only provide sensitive information when you understand who you're dealing with and why the information is required.
Why do they need access to my online banking?
They shouldn't.
Am I being pressured to act?
If you don't have time to research the offer, don't accept it.
What YNCU members should know
At YNCU, protecting members' financial information is a priority. YNCU will never ask you to give another person your online banking password or provide access to your account so they can move money on your behalf. If you're unsure whether a communication or financial offer is legitimate, stop and contact YNCU through a trusted channel.
YNCU also provides mobile banking services, including mobile cheque deposits through its official app. Only use YNCU's official website or official mobile banking app to access your accounts.
Think you've been targeted? Act quickly.
If you believe you've been the victim of an online loan scam or fraudulent cheque scam:
1. Stop communicating with the scammer.
2. Don't send any additional money.
3. Contact YNCU immediately.
4. Secure your online banking and other compromised accounts.
5. Review your account activity.
6. Report the incident to the Canadian Anti-Fraud Centre.
For additional fraud-prevention information, visit the Canadian Anti-Fraud Centre.
Frequently Asked Questions
Can a cheque marked “For Mobile Deposit Only” be fake?
Yes. The wording itself doesn't make a cheque fraudulent. “For Mobile Deposit Only” is a legitimate instruction associated with electronic cheque deposits. The concern is whether the cheque and the circumstances surrounding it are legitimate.
Is it safe to give an online lender my banking password?
No. Never give an online lender your online banking password or security credentials. If someone says they need your login to approve or deposit a loan, treat it as a major warning sign.
Can I spend money from a cheque immediately after depositing it?
Not necessarily. Cheques may be subject to hold periods and further verification. Ask your financial institution when funds are actually available before relying on a cheque deposit.
What happens if I deposit a fraudulent cheque?
The deposit may ultimately be reversed after the cheque is identified as fraudulent. If you've already transferred or spent the funds, you may face financial consequences. Contact your financial institution immediately if you suspect fraud.
What should I do if I gave a scammer my banking information?
Contact your financial institution immediately, explain what information you disclosed and follow its instructions for securing your account. Change compromised credentials and monitor your account for unauthorized activity.
How do I report an online loan scam in Canada?
You can report fraud to the Canadian Anti-Fraud Centre and contact your financial institution and local police as appropriate.
