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Money Order Scams

Identify and Protect Yourself from Money Order Scams

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Money order scams are common when selling items online. Before handing over merchandise, be sure you’re dealing with a legitimate buyer. Be especially careful if you’re asked to send money after receiving a money order.

Why Money Order Scams Work

Money orders can be a safe way to receive payments. Unfortunately, the sense of security you feel allows you to drop your guard. Money order scams work because you believe you’ve been paid and there’s nothing to worry about. In truth, you should always treat money orders with caution.

A Typical Money Order Scam

A typical money order scam involves an inquiry from somebody far away -- another state or country. They say they’ll buy your item, but when the money order arrives it’s for much more than it should be. Why? The buyer will ask you to send the excess money (above and beyond your sale price) somewhere. Perhaps you’re supposed to send the funds to an expensive shipper who handles overseas transactions. Perhaps the buyer will ask you to refund the excess because he couldn’t get a money order for the correct amount. In any case, you’ll lose that money for good if you send it.

Sometimes a money order scam is much simpler: you just get a fake money order and send your merchandise away. The buyer doesn’t ask you to send cash -- they just get the goods for free.

Where Things Fall Apart

If you send money that you think you got from a money order, expect to hear from your bank. When you deposit a money order in your account, your bank will allow you to use some or all of the payment immediately. However, the bank has not yet collected the funds from the money order issuer -- that’ll take a few days or weeks.

When your bank tries to collect the funds (from Western Union, let’s say), they’ll find out that they’ve got a money order scam on their hands. They won’t get any money, and they’ll deduct the fake money from your account. If your account is empty, you’ll go into the negative and you’ll have to pay the bank back. Plus your checks will bounce and your debit/ATM card will become worthless if the money order scam wipes out your account.

Protecting Yourself

What can you do to protect yourself from money order scams? The best thing you can do is work with people you know and trust. You may have to expose yourself to the risk of money order scams if you want new customers though.

You’ll be able to spot most money order scams a mile away if you pay attention. But when life gets busy it’s easy to miss a detail and forget how these scams work. A major red flag -- and something you should never go along with -- is a request to send or wire money after you’ve been paid with a money order. Other red flags:

  • An offer that came from out of the blue (how did this generous trusting person find you?)
  • International money orders
  • Messages with numerous grammar and spelling mistakes
  • Refusal to pay you electronically (they can’t wire money or use an online service)
  • Buyer is not very interested in checking out the merchandise or product details
  • Buyer asks for sensitive information like your bank account number, etc
  • It sounds too good to be true
Always verify funds when you’re paid with a money order. Call the money order issuer and check to see if you’ve got a legitimate document. You can never be 100% certain, but you can improve your chances. If you have any doubt, don’t spend the money you get from a money order. Treat it as suspect -- if you’re lucky you can spend it someday. Otherwise be prepared to repay the bank. It can take weeks or months for the bank to figure out that you’ve fallen into a money order scam. Most of the time you’ll find out about a bad money order within a few weeks, but it can take longer.

Feel free to ask your bank for help. They’ve seen money order scams before and can talk about any suspicious transactions with you.

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