Cashier’s check fraud is one of the most popular crimes in the internet age. Once thought to be safe, cashier’s checks now require extra attention. This is true whether you're selling something online or in-person. Make sure you know all the red flags of cashier’s check fraud so you can avoid expensive scams.
Safety and Cashier’s Check Fraud
It is ironic that sellers, who used to rely on the safety of these checks, now have to be more careful than ever. If you don’t know your buyer, you simply cannot assume that a cashier’s check is just as good as cash. While these checks certainly have advantages over personal checks, it never hurts to be safe.
A Typical Cashier’s Check Scam
The most common cashier’s check scam goes something like this: a "buyer" wants to purchase a product and will use a cashier’s check. For whatever reason, the buyer has a check issued for an amount in excess of the purchase price. Then, the buyer wants the seller to "just go ahead" and deposit the check. Finally, the buyer requests that you return the excess money, typically in cash or by wire transfer (the funds either go directly back to the buyer or to a third party).
If you’re faced with a situation that looks anything like this, you’re almost certainly dealing with a thief. Don’t send any money until you find that the paying bank has actually paid the funds. How long will that take? If you have any doubt, it's best to wait a while.
The trick behind cashier’s check fraud is that fact that the payee’s bank credits the seller’s account before the funds have actually arrived from the paying bank. Therefore, it looks like the funds have cleared and everything is OK. If you’re not sure what the difference is between seeing the dollars credited and actually having the dollars, visit your bank and ask.
Picking Cashier’s Check Fraud Apart
As with everything, you have to ask if the situation makes sense. Why would a person you’ve never met entrust you with thousands of dollars? If they can contact you, they can surely give adequate instructions to have the bank issue a cashier’s check correctly. If the excessive amount was in fact the buyer’s fault, wouldn’t the buyer pay the $3 (or whatever) fee to have an accurate check printed instead of giving you (a stranger) the opportunity to hold on to the extra cash?
Finally, if they can come up with the money, they can surely afford to pay an extra cashier’s check fee to write a separate check to their “agent” or “associate” who you're supposed to forward the money to.
Detailed Cashier’s Check Fraud Examples
There are a number of good sites that provide examples of how cashier’s check fraud has worked in the past. Among them:
- The FTC’s Consumer Alert on cashier’s check fraud and overpayment scams
- FDIC’s FRAUDAlert has some creative variations of the cashier’s check fraud
- Snopes.com’s cashier’s check scam page. It’s not an urban legend!
The lesson is clear: don’t believe that cashier’s checks are just as good as cash. They're often used in scams.
There are several things you can do to protect yourself:
- Never accept a check for more than you asked for
- If possible, go to the bank with whoever is paying you and watch them get the cashier's check from a teller (stand in line with them so there's no "switcharoo")
- Verify funds on any check or money order you receive, but keep in mind that this isn't a foolproof tactic (it'll just reveal some of the sloppier criminals)
- Insist on other forms of payment that you know are more reliable (such as a wire transfer) but be careful who you give your bank account information to