The Facts on Cashier’s Check Fraud
Cashier’s check fraud is a crime that is certainly growing in numbers. Cashier’s checks were once thought to be “guaranteed” funds as a form of payment because they are issued directly by the bank, but now scam artists have found ways to forge these documents and rely on the fact that a consumer trusts a cashier’s check over personal checks.
How it Works
A consumer will receive a forged cashier’s check as payment upon goods, services or part of another underlying scam. They will then deposit the check and the funds will become readily available by their bank. Though this seems as though the check is legitimate, the bank is allowing the funds to become available due to the fact that by federal law, check payments must be available within so many days after deposit. Whether or not the check has been fully verified. The consumer will then provide goods or services, or fall victim to another scam, only to find that when the check has been verified it is classified as fraudulent and removed from the consumer’s bank account.
Common Cashier’s Check Scams
Though cashier’s check scams are becoming more and more creative, there are still a few common ways this scam is played out:
- Sale of Goods – A fraudulent check is used to pay for a sale of goods.
- Excess of Purchase Cost – The fraudulent check is used for the sale of goods, but specifically written over the total cost. The scam artists then instruct the consumer to wire the remaining funds to a business associate.
- Unexpected Funds – This is a scam that involves a letter to consumers informing them that they are eligible to receive a large sum of money. Often these claim to be foreign lotteries or estate beneficiaries. The consumer will be instructed to deposit the check and wire a portion of the funds to a third party.
- Mystery Shopping – Consumers will be informed that they have been chosen to become a mystery shopper. They are then instructed to cash a particular cashier’s check and wire a portion of their earnings to a third party as part of a “fee”.
In all of these situations, the cashier’s checks turn out to be fraudulent leaving the consumer with no money, no goods and sometimes less money than they started with.
Resources:
Avoiding Cashier’s Check Fraud, www.occ.gov, November 29, 2010, http://www.occ.gov/news-issuances/consumer-advisories/2007/consumer-advisory-2007-1.html