A forged check ring has been scamming dealers in the Detroit area for thousands of dollars, according to an alert issued by the Michigan Independent Automobile Dealers Association.

The problem was brought to the attention of the association when a member reported that his dealership accepted an insurance check as payment for a vehicle, reported Used Car News.

“The check was for a couple thousand dollars more than the price of the car, so [the dealership] cut a check of its own to cover the difference between the price of the car and the amount of the insurance check,” said Nancy Chapman, Michigan IADA executive director. “The insurance check was fake.”

Chapman sent out a broadcast fax to all Michigan IADA members, warning them of the con. After receiving the fax, association members in other Michigan cities contacted her to say the same thing happened to them.

Phyllis Dart, a bookkeeper with Tyme Auto Sales in Plymouth, Mich., said they were hit with a fake check in December 2004. That time it was a home equity check.

“The check looked real,” Dart said. “We ended up reimbursing the customer with a $1,100 check of our own. They took the check we gave to them, duplicated it using computer scanners and printers, edited out our telephone number and replaced it with one of their own on the check.”

Then they took the fake Tyme Auto check to another dealership. This dealer had done business with Tyme Auto and the salesman became suspicious, Dart explained.

“He called us and we said the check was fake,” Dart said. “They called the police and they picked up the woman who was passing the check.”

Dart’s advice to any dealer who is presented with a check for more than the sale price of a car is to tread carefully. Ask the customer to cash the check and pay with the cash.

Steve Baker, director of the Midwest Region for the Federal Trade Commission in Chicago, said his office has been receiving reports from around the country about variations of this crime.

“We’ve had reports from the Washington, D.C. area to Minnesota,” Baker told Used Car News. “This is becoming a very popular crime with criminals.”

One variation, Baker said, deals with “buyers” having their agents pick up a vehicle sold over the Internet.

The buyer will send a check in excess of the agreed upon sale price. He will ask the dealer to cut a check of his own for the difference in the sale price of the car and the buyer’s check.

The dealer check is then given to the agent who is picking up the car as a fee for his “work.”