Wednesday, January 1, 2014

Cashier's check--the scam

 
 
Happy New Year! As a little present to readers, I thought I'd post a public service announcement about a con that almost happened to my sisters and me. We own a house together that we rent out as a vacation rental sometimes, and my sister handles all inquiries. She could tell this story better than I can, but in any case,  recently she had a prospective tenant send her a cashier's check for a deposit, which seemed fine. The only odd thing about it was that somehow the woman had paid twice the amount, apparently mistakenly sending the money for another rental to her. She asked my sister for the excess money back. Sure, a little fishy, but it was a cashier's check, right? And the money had already come into our account. So my sister was all set to send her the requested money back when my cousin happened to call and the situation came up. My cousin said, that sounds like a scam--I've heard about this kind of thing.

So luckily my sister did not send the woman the money and we didn't end up losing money to a con artist. Like many people, we had naively thought that a cashier's check pretty much had to be on the up and up. This, however, is not true.

The loophole that the con artist exploits here is that the Federal Government Insurance Corporation requires banks to make funds available from cashier's checks, teller's checks and certified checks within one to five days. So the check will appear to have been deposited in your account. But this may be considerably before the issuing banks has honored it. And that gives a person sending a fraudulent check more than enough time to maneuver. There are many variations on the scam, but one basic device is that the scammer persuades you to send money back on what appears to be an overpayment before the check is revealed as fraudulent. Any misgivings the payee may have are mitigated by the 'good as gold' reputation of cashier's check, as well as the fact that the money appears to now be safely in their account.

The scam is still relatively new, which is why many people who aren't involved in commerce in a day to day way may still be unaware of it. When I used to work in the bookstore, we became aware of a Nigerian credit card scam using stolen cards over the phone. For some odd reason, they always seemed to be wanting to buy Black's Law Dictionary in quantity or something equally dubious. The cashier's check scam too seems to have originated in West Africa. But if our story is anything to go by, the Ukrainians seem to have taken a fancy to it.

For more detailed examples, here's Snopes, and here's the OCC with their own examples. Oh, and here is a blog post by an artist named D. Michael Coffee, telling the story of how a scam was attempted on him. I include it because it's informative and because he has a photo of fake cashier's check at the end, annotated with what is wrong with it.

8 comments:

  1. Interesting little maneuver. Glad you caught on to it.

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  2. It was actually very lucky that we caught on in time, which is why I thought I'd pass it on on the off chance it helps someone else.

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  3. I spent a wearying 1 hr and 20 minutes at the bank yesterday trying to get them to put a check to me in US dollars into my bank account. they wouldnt do it in the end and have passed it up the chain so it will take 30 days to process... Banks completely defeat me.

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  4. Last year I had a really bad experience making an eCheck deposit on a vacation rental house. I'm thankful the house owner worked with me and did not suspect me of trying a similar scam. Our vacation turned out great once we got the financial ducks in a row.

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  5. Adrian, funny how the banks always seem to win, isn't it?

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  6. Nancy, I have to say that this is the only bad experience we've even had come close to happening. The actual renters have all been great, which would have pleased my mom, whose house it really was, no end.

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  7. This is a very interesting post. It is true that the scam is still relatively new. This is why many people who aren't involved in commerce in a day to day way may still be unaware of it. Management Assignment Help

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  8. Yes, we've been taught that the exact opposite is true.

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