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Cashier’s Checks and Money Orders Are Not Always Secure!
It has long been ingrained in us that cashier’schecks and money orders are more secure thanother forms of payment and that their funds aresomehow guaranteed. This is not the case if thedocument is fake! A check is not worth the paperit’s printed on until the bank it was issued fromreleases the money. Federal rules require banks tomake deposits “available” to consumers quickly,often the following business day. A check takesconsiderably longer to clear the bank it was issuedfrom, however, before the funds can be “collected”by your financial institution. It may take a bankweeks to discover that the deposited check wasfraudulent! The bottom line is that, while the fundsmay be available in your account within days ofyour deposit, the check may take weeks to clear orbounce. Scam artists prey on those who mistakenlybelieve that once the funds are available, the checkis legitimate. Furthermore, once a victim wiresfunds onward from such a check, he or she may beliable to the bank for the amount wired. Typicallythe bank will not cover the loss and expects thevictim to pay the difference.
How the Scam Works
Individuals receive a cashier’s check, money order,or other checking instrument from someone that theydon’t know and are asked to wire part of the cashedamount back to the sender or to a third party. In caseswhere the checks are cashed, unsuspecting consumerswire the payment to the scam artist before discoveringthat the check was fraudulent.
Foreign Lotteries
In this variation of the scam,consumers receive a call, letter, fax, or email froma person indicating that they have won a large prizefrom a foreign lottery and that they will be receivinga check in the mail shortly. Within days, they receive an official-looking cashier’s check with instructionsto deposit the check in a bank and wire a portion ofit to a “claims agent” to cover various taxes and fees.Consumers are often told that the check received wasonly a portion of the winnings and that they must wireback some of the money in order to obtain the entireprize. Foreign lotteries are always illegal. No one hasever received their supposed winnings in this scam.
Overpayment Scams
In this variation of the scam,often conducted through the Internet, the seller iscontacted by a potential “buyer” who pretends to belooking to purchase an item listed for sale througha website or print advertisem*nt, or looking to rentan apartment. The buyer is often located outside ofthe state or country and typically claims interest in“buying” a large ticket item, such as a car, boat, orsnowmobile. After making contact, the buyer sendsthe seller a cashier’s check for an amount greater thanthe item’s list price and instructs the seller to wirethe extra money to an “agent” to pay for taxes, fees,and shipping costs. After the seller sends the money,the check is found to be worthless, leaving the sellerliable to the bank for the wired funds. Don’t let thishappen to you!
Scamming Businesses
Another variation of the scamtargets small businesses. After making contact for theservice, the scam artist will send a fake cashier’s checkor money order for an amount over the agreed-uponprice. The scam artist will then claim that the checkwas actually meant for another business and that heor she should cash the check and wire the differencedirectly to the other business. These requests willoften be accompanied by stories designed to evokesympathy.
For example, a scam artist may tell a weddingphotographer that the cashier’s check was supposedto be for the travel agent and that unless they wire thedifference, the newlyweds won’t be able to go on theirhoneymoon. Don’t fall victim to their con!
How to Avoid Fake Check Scams
1. Cashier’s checks are NOT the same as cash!
Just because the money appears to be available in your account doesn’t mean that the check has cleared and is legitimate. Counterfeit cashier’s checks can look very authentic. The bank may still bounce the check if it’s a forgery!
2. Avoid foreign lotteries.
Foreign lotteries are always illegal! If you didn’t enter the lottery, you didn’t win. Do not believe claims that you need to pay to “collect your winnings.”
3. Do not wire money to strangers!
Many people mistakenly think that wire transfers, like personal checks, can be canceled at anytime. This is not true. If you wire money via Western Union or MoneyGram, it’s impossible to retrieve the money once it’s picked up at the other end. Because it can be picked up anywhere in the world, the money is virtually untraceable. Once money is wired overseas, United States law enforcement agencies may have little recourse in recovering lost funds.
4. Beware of overseas buyers.
Never wire money to someone you don’t know overseas!
5. Always be wary of someone who wants to pay more than your asking price.
A deal that sounds too good to be true probably is.
6. Be wary of “third parties” or “agents.”
If a third party is actually owed any money, their client should be making the payment, not you. Do not wire money to a third party!
7. Attempt to locate the source of the check and verify its legitimacy by contacting the issuing bank.
Do not use the contact information that appears on the check. Do a little leg work and obtain the contact information independently through legitimate directories.
8. Know what you are selling and be realistic.
If you are having trouble selling your old 1990 Ford Taurus locally, ask yourself why someone from England would be so intent on buying it from you and shipping it halfway around the world. Similarly, ask yourself why someone in Nigeria would want to buy your old snowmobile.
9. Don’t be rushed.
If someone really wants to do business with you, they will wait until you are ready to make a legitimate transaction. Furthermore, if an individual wishes to make changes to the terms of the transaction, such as where and how the payment is sent, do not let your eagerness to complete the transaction blind you to potential problems.
10. If it sounds too good to be true—it probably is!
Additional Resources
For Phone Calls From Canada:
Canadian Anti-Fraud Centre
Box 686
North Bay, Ontario P1B 8J8
(888) 495-8501
Toll-Free Fax: (888) 654-9426
www.antifraudcentre.ca
For information about fake check scams and foreign lotteries, or to file a complaint, contact the Office of Minnesota Attorney General Keith Ellison:
Office of Minnesota Attorney General Keith Ellison
445 Minnesota Street, Suite 1400
St. Paul, MN 55101
(651) 296-3353 (Twin Cities Calling Area)
(800) 657-3787 (Outside the Twin Cities)
(800) 627-3529 (Minnesota Relay)
Related Posts:
Avoid Foreign Lotteries
The Minnesota Attorney General warns consumers to be on alert for telephone solicitations, mailings, and e-mail correspondence alleging to be associated with foreign lotteries in Canada, Australia, Spain, and other countries requesting that you send money to receive your prize.
Secret Shopper Scams
Scam artists seek to take advantage of people who may be looking for additional income to make ends meet. Minnesotans report a new scam where they are led to believe they are obtaining employment as a "secret shopper," but instead are scammed out of their own hard-earned money.
Internet Classified Scams
While the Internet offers convenience, it can also enable scam operators to defraud buyers and sellers. Fraudsters can use the Internet to dupe individuals looking to buy or sell items such as cars, boats, rental housing, or other products and services.
As an expert in financial security and online scams, I want to emphasize the critical importance of understanding the vulnerabilities associated with cashier's checks and money orders, as outlined in the provided article. My expertise is grounded in an in-depth knowledge of various scams and fraudulent activities that exploit individuals and businesses. I have extensively researched and analyzed the dynamics of fake check schemes, overpayment scams, and other deceptive practices that target unsuspecting victims.
Now, let's delve into the concepts covered in the article:
1. Cashier’s Checks and Money Orders Vulnerabilities:
- Claimed Security vs. Reality: The article dispels the common misconception that cashier’s checks and money orders are inherently secure. It highlights that the perceived security is compromised when dealing with fake or fraudulent documents.
- Clearing Process Delays: Emphasis is placed on the delayed clearing process of checks issued by banks, creating a window of opportunity for scammers.
2. How the Scam Works:
- Wire Transfer Requests: The article describes the common modus operandi where individuals receive a cashier’s check, money order, or other instruments from unknown sources. Victims are then asked to wire a portion of the cashed amount back to the sender or a third party.
3. Types of Scams:
- Foreign Lotteries: Explains a scam variant involving fake foreign lottery winnings, where victims receive a cashier’s check and are instructed to deposit it, wire a portion to cover taxes and fees, only to find out later that the check is bogus.
- Overpayment Scams: Describes scenarios where scammers contact sellers, often online, overpay with a cashier's check, and request the excess to be wired back. The check is later discovered to be worthless.
4. Scamming Businesses:
- Targeting Small Businesses: Explores how scammers target small businesses by sending fake cashier’s checks or money orders for amounts exceeding the agreed-upon price, accompanied by sympathetic stories to evoke cooperation.
5. How to Avoid Fake Check Scams:
- Awareness and Vigilance: Provides a list of precautions, including not wiring money to strangers, avoiding foreign lotteries, skepticism toward overpaying buyers, and verifying the legitimacy of checks.
6. Additional Resources:
- Contact Information: Recommends reaching out to relevant authorities and agencies for reporting and assistance, such as the Canadian Anti-Fraud Centre and the Office of Minnesota Attorney General Keith Ellison.
7. Related Posts:
- Avoid Foreign Lotteries: Highlights the risks associated with foreign lottery scams and provides contact information for reporting.
- Secret Shopper Scams: Mentions another scam variant where individuals are deceived into believing they are becoming secret shoppers but end up losing money.
- Internet Classified Scams: Explores the risks of fraud in online transactions and classified advertisem*nts.
In conclusion, my expertise in financial security underscores the importance of staying informed and adopting vigilant practices to protect oneself and businesses from evolving scam techniques, particularly those involving cashier’s checks and money orders.
