Fraud

• When you receive a check from a stranger, you have no way of knowing whether the person whose name appears on the check and the person who gave you the check are one and the same. You could attempt to verify the identity of the person by asking to see a form of identification, but a sophisticated fraudster could conceivably create a fake ID. Depending on your state's laws, you may fall foul of fraud laws as the person who actually negotiated the check if it turns out that the check was fraudulent.
  
  

Returned Checks

• If the stranger's check gets returned unpaid by the bank that funds were drawn against, then you, rather than your bank, are liable for the loss. Your bank can debit your account for the amount of the check. If you gave the stranger the check proceeds or spent the money on something, then the deduction of the funds from your account may cause other checks, such as your car payment or mortgage, to bounce. You could incur late fees from impacted creditors and even experience a break in service if a lack of funds in your account causes your utility or phone payment to bounce.
  
  

Fees

• Aside from incurring penalty fees from service providers and creditors, you also incur penalty fees from your bank. The federal reserve assesses a penalty fee on banks that process checks that are returned unpaid and your bank passes that fee on to you. Additionally, when your bank debits your account for the amount of the check, the debit may cause your account to go into the negative, in which case you also incur an overdraft fee. You incur additional overdraft fees for each withdrawal that hits your account when you are in the negative. These fees could quickly amount to several hundred dollars if a large number of checks are presented for payment against your account.
  
  

State Laws

• If the check bounces, you can sue the stranger who gave you the check, although in some states, the damages awarded in such cases cover only the amount of the check and do not necessarily cover all of the penalty fees that you paid. Furthermore, you can sue the stranger only if the check was drawn against a bank in your state. If the stranger gave you a check drawn against a bank in another state, you run into a legal issue because the crime occurred in one state but the check in question was governed by banking laws in a second state.