Cashier’s checks have historically been regarded as a trusted form of payment but recently, they have been used to scam consumers and sellers of goods, particularly over the Internet. Most banks give you access to the funds represented by a cashier’s check the next day, but it can take several days to several weeks before your account is debited in a cashier’s check scam. In the meantime, you may have irrevocably wired the funds to a scam artist or otherwise spent the cash, only to find out later, when the fraud is detected, that you now owe the bank the full amount of the fraudulent cashier’s check that had been deposited into your account.
You advertise a vehicle (or laptop, or furniture, or digital SLR camera, etc) for sale in the paper, on Craigslist, eBay, or on a flyer at the grocery store and get one person who seems to be particularly interested. Though your asking price is a little high, this buyer doesn’t bat an eye and asks if you’ll accept a cashier’s check for the full price. You can’t believe your luck that this guy doesn’t even want to negotiate the price down. “Of course,” you reply.
Two hours later, your buyer shows up with a very official looking cashier’s check (it even has an embossed seal) made out to you for the full amount. You sign the Bill of Sale, assign the title to him and he drives off in your old car. The next day you deposit the cashier’s check but two weeks later, your bank calls to tell you that the check was fraudulent … no good … fake … worthless.
Excess purchase price scam using a cashier’s check
Same scenario. You sell your car to Mr. Buyer for $8,900 but his cashier’s check is made out to you for $9,800. “Oops, my mistake! I should’ve noticed that, those tellers must have heard me wrong. Can you just write me a personal check for the $900 difference?” he asks. “Why not?” you reason, “after all this is a certified cashier’s check.” And he cashes your check that day AND makes off with your vehicle. You’re out the $900 as well as your car.
Other cashier’s check scams
Anytime someone sends you a cashier’s check and asks you to deposit it to your own account, then wire money to a third party – IT IS A SCAM. Just count on it, no questions asked.
Scams can come in the form of a “mystery shopper” company that sends you a check to purchase goods at local stores but to then transfer a portion of the money to a third party. They can come from an attorney saying you inherited a large portion of money but need to pay the processing fee.
They’re all scams!
The result of these scams is that the fraudulent check will be returned unpaid. The bank will then deduct the amount of the check from your account or otherwise seek repayment from you, and you will lose either the goods that you sold, the money that you sent to the third party, or both.
How can you tell if a cashier’s check is fraudulent?
Short answer: you probably can’t. It can be very difficult for either you or your bank to tell. Scammers try to make the item look genuine to delay discovery of the fraud. And they DO look like the real thing – the check may even be drawn on YOUR bank.
Laws meant to help consumers may actually hurt them in these fraud cases. When you deposit a check into your account, your bank generally is required by law to make the funds available within a specific period of time (usually, one business day for a cashier’s check or other official instrument). This is true even if the check has not yet cleared through the banking system. Therefore, even if the funds have been made available in your account, you cannot be certain that the check has cleared or is “good.”
Your bank also may not be able to determine that the check is fraudulent even if you deposit it in person. Rather, your bank may learn of the problem only when the check is returned unpaid by the other bank – which may take a couple weeks or more. Once the item has been returned unpaid, your bank, generally, will reverse the deposit to your account and collect the amount of the deposit from you.
What steps should you take to protect yourself from becoming a victim of fraudulent cashier’s check scams?
- Know who you’re dealing with … or find out. Verify as much information as possible, even if it means having to wait a day or so to make the sale. Scammers often deal on weekends when banks are closed, so be prepared to lose this sale. It’s better than losing your money.
- Never accept a check for more than the purchase price. Why would this buyer be so willing to trust you anyway?
- Never call the bank’s phone number that’s listed on the check – look it up online instead. That number probably goes to one of the scam artist’s associates.
- If possible, call the bank listed on the check at least attempt to verify its legitimacy.
- Consider using a reputable escrow agent or an online payment system for Internet sales.
- Be very suspicious if someone wants you to wire money.
- Reject any “prizes” you have to pay for.
- Demand cash as payment.
If you’ve become a victim of cashier’s check fraud
What are your rights?
If you find yourself in this situation, you ordinarily would have a remedy against the person who wrote the check. However, you will have great difficulty pursuing any remedy against these scammers, especially if they reside in a foreign country or have disguised their identities.
In addition to contacting the appropriate banks, there are others whom you also should notify if you receive a counterfeit item. They include:
- Scams: generally–Federal Trade Commission (FTC): by telephone at 1-877-FTC-HELP or file an electronic complaint via their Internet site at www.ftc.gov.
- Internet-based scams: Federal Bureau of Investigation (FBI) Internet Fraud Complaint Center: www.ic3.gov.
- Mail-based scams: U.S. Postal Inspector Service: by telephone at 1-888-877-7644, by mail at U.S. Postal Inspection Service, Office of Inspector General, Operations Support Group, 222 S. Riverside Plaza, Suite 1250, Chicago, IL 60606-6100 or file a complaint online by going to the Mail Fraud Complaint page on their website.
Scams also may involve other types of checks. For example, the fraudulent check may appear to be written on the account of a real person or company or be written on an account that contains insufficient funds to cover the check. Other scams involve fraudulent postal service money orders or fraudulent money orders that appear to have been issued by a bank.
Photo by paf23