Recently, many consumers have become victims of scams involving a fraudulent cashier’s check. A cashier’s check is a check that is issued by a financial institution and sold to its customer or another purchaser. Cashier’s checks are viewed as relatively risk-free instruments and, therefore, are often used as a trusted form of payment to consumers for goods and services.
However, cashier’s checks lately have become an attractive vehicle for fraud when used for payments to consumers. Although the amount of a cashier’s check quickly becomes “available” for withdrawal by the consumer after the consumer deposits the check, these funds do not belong to the consumer if the check proves to be fraudulent. It may take weeks to discover that a cashier’s check is fraudulent. In the meantime, the consumer may have irrevocably wired the funds to a scam artist or otherwise used the funds – only to find out later, when the fraud is detected – that the consumer owes the full amount of the cashier’s check that had been deposited.
Scams to Watch Out For:
You sell goods in the marketplace – for example, over the Internet. A buyer sends you a cashier’s check for the price that you have agreed on, and you ship the goods to the buyer. The cashier’s check turns out to be fraudulent.
Excess of Purchase Price
This scenario is similar to the one described above. However, the buyer sends you a cashier’s check for more than the purchase price and asks you to wire some or all of the excess to a third party, often in a foreign country. The buyer may explain that this procedure allows the buyer to satisfy its obligations to you and the third party with a single check. The cashier’s check turns out to be fraudulent.
You receive a letter informing you that you have the right to receive a substantial sum of money. For example, the letter may state that you have won a foreign lottery or are the beneficiary of someone’s estate. The letter will state that you have to pay a processing/transfer tax or fee before you receive the money, but a cashier’s check will be enclosed to cover that fee. The letter will ask you to deposit the cashier’s check into your account and wire the fee to a third party, often in a foreign country. The cashier’s check turns out to be fraudulent.
You receive a letter informing you that you have been chosen to act as a mystery shopper. The letter includes a cashier’s check, and you are told to deposit the check into your account. You are told to use a portion of the funds to purchase merchandise at designated stores, transfer a portion of the funds to a third party using a designated wire service company, and keep the remainder. The cashier’s check turns out to be fraudulent.
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. The result of these scams is that the fraudulent check will be returned unpaid. You could lose either the goods that you sold, the money that you sent to the third party, or both.
Always exhibit caution when dealing with checks, and stop in or call if you have any questions or concerns.
**When you sign the back of a check and deposit it, you become responsible for that check. The risk of the check bouncing or being bad is on you. Federal law (Regulation CC) requires that all financial institutions make at least part of the amount you deposited available within a few days. However, you can run into trouble if you spend the money before the check is fully cleared. If you spend the funds from a bad check, you are responsible for paying the money back to the financial institution.
**In addition to being responsible for the dollar amount of the check, you may also be subject to processing fees assessed by your financial institution for checks which have been returned for NSF (Non-Sufficient Funds).
**Check holds are a temporary delay in making the funds in your checking account available after you deposit a check. Check holds can be placed for a variety of different reasons including checks for over $5,000, new account checks, redeposited checks, and suspicion of fraudulent checks.