Quatloos!

Warnings are going out to collections firms to watch out for the bad-check deposit scheme.

The scammers are allegedly retaining collections law firms to recover a substantial debt from a recently defunct business that has not filed for bankruptcy. Not long after the firm sends a demand letter, this new client sends the firm a check they allegedly received from the debtor, payable to the collections law firm. They tell them to go ahead and deposit it, retain their fees/expenses and then wire-transfer the balance.

Surprise, of course - the check is a phony and if the firm doesn't wait a few days before wiring the funds they're screwed.

The collections firm our company has used in past must be ahead of the game on this scam. They have the ability to electronically clear checks in-house before sending on the client's share of the take.