Just 6 short months ago, I left the comfortable security of employment and took my first steps into the deep, dark jungle of freelancing. It didn’t take very long before I found myself teetering at the edge of a deadly pit trap.

At first, it was an enjoyable adventure. I was getting out there, meeting people, and learning new things. LinkedIn started to become my new stomping grounds as I explored different groups, met new people, got to know their needs and found ways to help them out.

I spent an entire week attending a virtual conference for Virtual Assistants! Eight 1-hour webinars for five days! Experts in their field taking time to share what they know and help other VAs to develop and grow their businesses!

I found out about Elance.com, oDesk.com, and Amazon Mechanical Turk and learned about the exciting world of job boards. Job boards, for those of you who don’t know, is where employers come and post jobs of all kinds. Freelancers can then go in and submit proposals to bid on the jobs. May the best proposal win!

It was all very exciting! I won my first job on Elance and met an amazing motivational speaker. I connected with a small business owner on LinkedIn and discovered an exciting business opportunity. I got to know another small business owner through a morning networking group and opened up more business opportunities.

The world was my oyster and there was no way to go but up!

But then, something odd happened. I bid on, and won, a job on Elance. It started out innocently enough. The employer identified himself as Christopher Carter and his company as Fidelity Recruitment (www.fidelityrecruitment.com). I performed my due diligence: I researched the email address he was using, the company name and website, his name and text number. No red flags came back. I looked at the header information on the email and nothing looked alarming. I even found a Christopher Carter employed at Fidelity on LinkedIn!

I did think it was odd when he conducted the entire interview over phone text but figured that if that’s how they communicate with their employees, it makes sense to see how well the employee candidate communicates on the chosen medium.

But then he sent me a sizeable check via Fedex. I was to deposit it into my account and use it to pay for the hardware that I would be using to perform the job. At this point, I was just some stranger on the other end of the phone to him. We had not engaged into any kind of business relationship. No contracts had been signed. No agreements made.

You can see where this is going.

I’m writing this as a warning to all you freelancers out there. If it looks too good to be true, it probably is! Let’s do the math on this one:

The check was for a little over $2,000.00. That’s not a lot in the grand scheme of things. It’s small enough that, if you got burned, you might be tempted to just shrug it off as a lesson learned.

But when I went back to Elance to report this as a fraudulent employer, I noticed that 78 people had bid for this position.

78 people!
If ‘Christopher’ was perpetrating this scan on all of them, he would walk away with $156,000.00!

So how does the scam work? I’ll tell you.

‘Christopher’ sends you a check via Fedex. He displays some urgency in the matter, needs it to be deposited immediately so that, as soon as it clears, funds can be wired to the hardware vendor to purchase the hardware.

The bank does their due diligence and waits a full business day before releasing the check into your account.

As soon as the funds are in the account, ‘Christopher’ sends the info for the wire transfer and says “Go do this right away and send me a copy of the receipt as soon as it’s finished.”

The next day, ‘Christopher’ says “OK, now we’ll use Western Union to send money. Out of what’s left of the money, send funds to this person and here’s the test question you should set up. Tomorrow, those funds will be returned to you. Go do this right away and send me a copy of the receipt when you’re done.”

Now, all this time you’re sitting secure in the knowledge that the bank has cleared the check before releasing it into your account. Right?

Wrong! Just because the bank releases the check hold, it does not guarantee the check is past the bouncing point. From what I can tell, they are giving it a day to see if the check will bounce. But what if the check bounces on the fourth day? After you’ve innocently sent money via wire transfer and Western Union?

Suddenly, the check bounces and the bank pulls the full amount of the original check back out of your account. And if you’ve already spent the money, then the bank takes the full amount of the check from what’s left in your account. And if you didn’t have that much in your account when this whole thing started, well now you’re looking at a negative balance on your account. And the bank is going to expect you to put that right. Very quickly, thank you very much!

‘Christopher,’ meanwhile, is laughing up his sleeve and counting all of the money that you gave him.

Freelancers, beware!
When I was speaking with my bank, doing research on how freelancers can protect themselves, they told me there isn’t a single kind of check that’s bounce-proof. Not a Cashier’s check, not a Certified check, not a Bank draft. All of these ‘pull’ money from the issuer’s account. And if the issuer’s account has insufficient funds, then the check will bounce.

It’s much safer to accept money from sources that ‘push’ the money to you – like Western Union or Paypal.

If you’re using job boards, take advantage of the Payment Protection feature, if the site offers one. Elance, as an example, will hold an escrow account for you. The employer funds the account and, after you perform the work, the funds are released to you.

Take the appropriate steps to protect yourself by using the tools developed for that purpose!