Cashier’s Check Fraud & Scams: How To Spot A Fake
Consumers and merchants often rely on the security of cashier’s checks for major transactions such as the purchase of a home, car or jewelry. But “security” in this case simply means that cashier’s checks won’t bounce because the issuing banks take full responsibility for covering payment. They aren’t, however, secure from fraud and scams.
Printing technology has grown so advanced over recent years that it’s relatively easy for scammers to forge cashier’s checks in their own basements. As a result, even bank employees may find it difficult to detect a fake, and it can take weeks before a counterfeit cashier’s check is discovered. What’s more, if you spend the funds prematurely, you’ll be liable for the unpaid check (and the resulting fees) once the bank discovers it’s fraudulent.
To help you protect yourself from such crimes, we’ve laid out instructions for verifying the validity of cashier’s checks, spotting the fake ones and reporting an incident if you are ever victimized in a scam below. For general information about cashier’s checks — such as where to buy them and how much they cost — please refer to WalletHub’s Cashier’s Check guide.
Types Of Cashier’s Check Scams
Cashier’s check scams come in various forms. The following table details the most common among them:
|Type Of Scam||Description||Signs It’s A Scam|
Scammers offer to:
-Buy an item you're selling
-Pay for your services in advance
-Rent your apartment or rent their apartment to you
-Give you a "deal" on merchandise
-Give you a job (often to "receive customer payments")
|If you’re selling merchandise, for instance, the scammer will ask you to provide your personal information for printing on a fake cashier’s check that’s usually written in a much higher amount than your asking price.
The buyer will then ask you to return the excess amount, claiming he or she made a mistake and hope that you’ll send back legitimate money before you realize the check was fake.
Scammers claim to be "hiring" people to:
-Work from home
-Become a secret shopper (often to "assess the quality" of a money transfer service)
|In the telecommuting scenario, victims receive a fake cashier's check as a starting bonus but are also asked to cover the cost of “account activation.” Scammers hope to receive account activation funds before the cashier’s checks would normally clear.
In the mystery-shopping scam, victims are told to deposit a cashier's check in their bank account and withdraw the amount in cash. They must then use a money-transfer service to send the funds to the scammer and "evaluate" the service.
Scammers tell victims:
-They won the lottery in a foreign country
-They received an inheritance from someone's estate
|Victims are instructed in a letter to “claim" their lottery winnings or inheritance but must first pay “taxes and fees” before receiving their prize or money. A fake cashier’s check is enclosed to cover those taxes and fees, which the scammer asks the victim to wire back.|
Scammers offer to pay by cashier's check for:
-Sale items posted on classified ads or online auction websites
|The scammer often uses an excuse to write the check in a much higher amount than the sale price then asks the victim to wire back the difference after depositing the check in their bank account.|
How To Spot A Fake Cashier’s Check
What does a fake cashier’s check look like? It’s hard to tell. Neither consumers nor bank tellers know what to expect because every bank uses a unique design that’s intended to make counterfeiting its cashier’s checks difficult. Fakes also can be hard to distinguish when they’re created using high-quality home scanners and laser printers that lend the checks an appearance of authenticity.
Look for the signs listed in the following table to help you spot a fake cashier’s check.
|What To Look For||Description|
|Check Origin||A genuine cashier’s check will display a legitimate bank name, but many fakes will too. You can tell a check is fake if you can’t find legitimate information about the issuing bank online or if the check was mailed from overseas (as is often, but not always, the case).|
|Check Amount||Fakes are often written in an amount far exceeding the amount required, which is intended to coax the victim into wiring back the balance to the scammer.|
|Safety Features||Fakes are sometimes missing security thread, watermarks, microprints, color-shifting ink, instructions for the bank teller (on the front or back of the check), etc. On the other hand, they may contain these features — but in poor quality.|
|Payee Name||The payee's name should already be printed on a cashier’s check (this is done at the bank by a teller). If the payee line is blank, the check is fake.|
|Bank Phone Number||A genuine cashier's check always includes a phone number for the issuing bank. That number is often missing on a fake check or is fake itself.|
|Suspicious Communication||Scammers often communicate with their victims using poor grammar/spelling or vague language. They may also refuse to meet in person or send an email or a text message indicating they’re not from your area.|
|Fraud Alert||The Office of the Comptroller of Currency (OCC) announces reported fraud cases on its website. If you received a cashier’s check from one of the implicated institutions — especially near the date the fraud was announced — you may have a fake. Keep in mind that the list includes only reported cases.|
How To Verify A Cashier’s Check:
Although the signs described in the above table may indicate forgery, they do not always guarantee that a cashier’s check is fake. It’s always a good idea to call or visit the bank before cashing or depositing a cashier’s check, whether or not you doubt its validity. However, do not contact the number that’s printed on the check, as it’s likely also a fake. Instead, search for the institution’s phone number online. Sometimes, the scammer will also use a legitimate routing number and account number on a check, so the bank will have to inspect the check for other indications of fraud.
What To Do If You’re A Victim Of Cashier’s Check Fraud
Even the most cautious consumers can fall victim to cashier’s check fraud. If you find yourself in such an unfortunate situation, you need to report the crime immediately to the following:
- The bank where you deposited the check
- The bank that supposedly issued the check
- The website or service where you encountered the scammer
According to the Office of the Comptroller of Currency, banks are ordinarily required to reimburse their customers for forged checks. However, that all depends on the circumstances of your case and your state’s laws. The bank can choose to investigate whether you deserve to be reimbursed, a process that may require you to first obtain a police report and file an affidavit.
However, a bank also can hold you liable for the entire amount of an unpaid cashier’s check then reverse the transaction upon discovering fraud. It will be your responsibility to pursue the party that issued the fraudulent cashier’s check to you.
If you think the bank did not handle your case properly, seek advice from an attorney about the applicable laws in your state — if you can afford to and if the amount of the check makes the dispute worthwhile. If you earn a low income, you can visit your local legal aid office.
Other Parties To Notify:
In addition, you should file a complaint with the following agencies or authorities to warn others and possibly get action on your case:
|Authority Or Agency||Types Of Cases Handled|
|Federal Trade Commission (FTC)||Scams & identity theft in general|
|U.S. Postal Inspection Service||Mail-based scams & identity theft|
|State Attorney General||Scams & identity theft in general|
|U.S. Secret Service - Financial Crimes Division||Bank & check fraud|
|Federal Bureau of Investigation (FBI) - Internet Fraud Complaint Center||Internet-based scams & identity theft|
Tips For Avoiding Cashier’s Check Fraud
At some point, most people will buy a car or a house in addition to other major transactions that require a relatively safe payment tool. By following the tips below, you can avoid becoming a victim of a scam or fraud if or when it’s time to use or accept a cashier’s check:
- Steer Clear Of Strangers: When it comes to financial transactions, a good rule of thumb to follow is to never accept a cashier’s check from someone you don’t know. It also helps to do business only with local people whose identities you can verify through a phone directory, for instance. Many scam artists operate from foreign countries. And if a buyer or customer instructs you to wire back funds before or after depositing a cashier’s check, this should raise a red flag that the check is fake.
- Go To A Local Bank With Your Buyer: If it’s necessary to accept a cashier’s check for a good or service you’re providing — especially for large transactions — you should ask to meet your customer at a local bank (or a local branch of a big institution). That way, you can instantly verify that a check was issued legitimately. If your customer refuses, it’s a good sign that you’re being conned.
- Don’t Accept More Than What’s Due: More often than not, a scammer pretending to be a buyer or customer will find an excuse to overpay for an item you’re selling or a service you’re offering. It’s always in your best interest to refuse a cashier’s check in an amount exceeding the actual price you’re asking for. Instead, you should ask the buyer to send you a check with the correct amount. Scam artists will usually refuse to do so.
- Understand The Difference Between ‘Clearing’ & ‘Funds Availability’: By law, banks must make funds available from certain types of deposits — such as cashier’s checks — by the next day or within a certain amount of time that a bank can justify as “reasonable.” However, available funds does not automatically guarantee that a check has cleared, meaning the Federal Reserve or other clearing unit has verified the validity of a check and that funds are available to cover it. Some checks unfortunately take longer to clear than others. If possible, wait until your cashier’s check has cleared (posted, not pending, on your bank account) before spending or withdrawing the funds. Otherwise, you’ll be liable for the full amount of the check and resulting bank fees.
- Use PayPal Or A Credit Card: Sometimes, scams work the other way around: you’re a customer buying from a supposed seller. Because cashier’s checks are guaranteed by the banks that issue them, a scammer will find it convenient to accept them to receive immediate payment but never send you the merchandise or provide the service you were seeking. If you’re responding to an ad online (e.g., Craigslist) or an online auction site, opt to pay with PayPal or a credit card instead. PayPal lends anonymity while credit cards provide $0 blanket liability for unauthorized transactions.
Image: Andrey_Popov / Shutterstock.com
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