Cashier's Checks - Good As Cash?
Protect Yourself Against Cashier's Check Fraud
The old adage, "a cashier's check is as good as cash," may, or may not, be true in today's world. A cashier's check-one where funds are already set aside in a special account at a bank-may seem like a safe way to receive payment for an item you're selling, but it is often very difficult for consumers and banks alike to determine if a cashier's check is genuine or counterfeit.
Cashier's check or "advance fee" fraud has become more prevalent as online auction sites have gained popularity as a way to buy and sell valuable items - such as collectibles, jewelry, electronics and even cars. Here are some examples of common scams involving cashier's checks:
• Internet Sales Scams: You sell goods (often over the Internet) and the buyer sends you a cashier check for the price you agreed upon. You ship the goods to the seller and 10 days later, your bank informs you that the cashier's check was fraudulent and that you're responsible for any money you've drawn against it. Unfortunately, you've lost your money and merchandise to a scam.
• Excess Fund Scams: You sell goods (often over the Internet) and the buyer sends you a cashier check for an amount in excess of the sales price and asks you to wire all or some of the money to a third party, such as a shipping agent. Your bank later notifies you that the cashier's check was fraudulent.
• Advance Fee & Lottery Scams: You receive a letter informing you that you have won a lottery (often a foreign lottery) or you are the beneficiary of someone's estate. The letter states you need to pay a processing or transfer fee before you can receive your winnings/inheritance, but a cashier check is enclosed to cover this cost on your behalf, all you have to do is deposit the check and wire the funds to the agent.
• Mystery Shopper Scams: You receive a letter informing you that you have been selected as a mystery shopper. The letter includes a cashier check that you are instructed to deposit and use the funds to purchase merchandise at designated stores, wire a portion to a third party and keep the remainder.
Banks are often required by federal law to make funds from deposited items available to account owners before it actually receives settlement from the bank on which the check was drawn. Your account agreement states if a deposited item is returned unpaid, the bank can charge it back to your account (reverse the deposit.)
So how can you protect yourself from cashier's check and "advance fee" fraud schemes? The Iowa Bankers Association offers the following tips for consumers:
• ACCEPT a cashier check only for the amount of your selling price.
• BEWARE if the buyer or seller asks you to send money quickly. Banks often take 10 days or more to determine if a cashier's check is counterfeit. Do not ship the goods or spend any of the funds sent to you until 10 days to two weeks after you deposit the cashier's check.
• KNOW who you are doing business with. Take steps to verify the name, address, phone numbers of the person you are dealing with.
• CONSIDER payment options other than cashier checks such as online payments, credit card payments or wires.
• TAKE the cashier check or other monetary instrument to a branch of the bank on which it is drawn if possible. That bank is in the best position to determine the check's authenticity.
• TALK to your bank if you are suspicious about the authenticity of any item you are depositing. The bank can attempt to verify its authenticity or send it directly to the issuing bank for collection.
• BE cautious! One old adage that still remains true is: "If it seems to be good to be true, it probably is!"
If You Are a Fraud Victim
Here are steps you can take if you become a victim of financial fraud:
• File a report with local law enforcement.
• File a complaint with the Iowa Attorney General. (1-888-777-4590)
• Work with your bank on repayment options if the reversal of the deposit has overdrawn your deposit account.
Information provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.mysmartfinances.com or www.iowabankers.com.