Common Cashier Check Scams
When it comes to financial scams, cashier’s checks are often viewed as low or zero risk, however, that’s not always the case. Many consumers inadvertently fall victim of cashier’s check fraud scams because it’s difficult to verify the validity of a cashier’s check. There are several tips to follow before accepting a cashier’s check as a form of payment for the sale of goods or to prevent falling victim of an unsolicited scam via text, phone, email, or mail.
Below are common scenarios to be aware of:
- Selling Goods:
You sell goods in the marketplace – for example, through social media or an online classified site. 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.
- Consider if the buyer seems too eager to buy your goods.
- Question why they would want to buy without seeing the goods
- Ask to meet in a public place and request cash or request to meet at the bank where the buyer is purchasing the cashier’s check.
- 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 the excess funds, or purchase gift cards and mail or text pictures of the gift cards. In some cases, the buyer may explain that the additional funds are to pay a driver for a delivery fee. The cashier's check turns out to be fraudulent.
- Ask yourself why would someone overpay for the goods you are selling
- Determine where the buyer is from. For example, does it make sense for someone who is 300 miles away to reach out to you to buy a dining table.
- Unsolicited Winnings:
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.
- Determine if you ever entered a lottery. These scams typically claim to be from a foreign country or out of state.
- If you won the lottery, you would NOT be asked to pay taxes or fees upfront.
- Mystery Shopping :
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 bank account. You are told to use a portion of the funds to purchase merchandise at designated stores. You are also asked to purchase gift cards and send pictures of those gift cards via text. In some cases, you may be asked to purchase money orders or send a wire and are advised that you may keep any remaining funds. The cashier's check turns out to be fraudulent.
- Remember, cashier’s checks are not always zero risk. Beware of this type of scam especially if it’s unsolicited.
- Ask yourself why a company would randomly mail a cashier’s check?
- Avoid depositing checks from someone you do not know, even if you met them online a few months ago.
- Property Rental:
Beware of interested individuals contacting you to rent your property. Typically the story is that they just found a job in the area and they need a place to stay quickly, or they are a father wanting to rent a room for their child to attend school in the area. They send a cashier’s check for the deposit and include the first and last month’s rent. Then suddenly the plans fall through and they ask you for a refund. Of course, the cashier’s check is fake. This means, you receive no money and you have now lost money.
- Don’t blindly accept cashier’s checks and assume they are good. Treat them as you would a personal check from someone you do not know or trust.
- Verify the validity of the cashier’s check by calling the issuing bank. Do NOT call the number on the cashier’s check, as oftentimes, it’s not the correct number for the bank.
How can you tell if a cashier's check is fraudulent?
It can be very difficult for either you or the bank/credit union to determine the item is fraudulent. When you deposit a check into your account, the credit union is generally 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 the case 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 or credit union also may not be able to determine that the check is fraudulent when you deposit it. Rather, your bank may learn of the problem only when the check is returned unpaid by the other bank—which may take a few days or more. Scammers try to make the item look genuine, which will delay discovery of the fraud. Once the item has been returned unpaid, your bank, generally, will be able to reverse the deposit to your account and collect the amount of the deposit from you.
Anytime a scam involves a cashier's check, official check, or money order from a bank, and you believe that it could be counterfeit, you should contact the issuing bank or credit union directly to report receipt of the check and to verify authenticity. When contacting the bank, do not use the telephone number provided on the check, as this number may not be associated with the bank, but rather with the scam artist.
- When depositing a cashier’s check, notify the teller where you received the check. Share as much information as possible. Do not use the funds right away. Especially if you are being pressured to turn around and purchase gift cards, money orders, etc.
What Are Your Rights?
Typically, when you receive a bad check, you have recourse against the person who wrote the check. However, you will have great difficulty pursuing any recourse against a scammer, especially if they reside in a foreign country or have disguised their identities.