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Finance 101

Protect Yourself from Cashier’s Check Fraud

Posted on June 26, 2015 by Kim Fein
Cashier’s check fraud has become one of the most popular crimes in recent years. Once thought to be safe, cashier’s checks now require extra attention. They are often thought to be as good as cash, but they’re really just like any other check, they’re only as good as the person giving it to you. Make sure you know all the telltale signs of cashier’s check fraud so you can avoid being scammed.

How This Scam Works

You post something for sale on the Internet, it could be anything from furniture to a vehicle. A person contacts you to purchase your item and says they will send a cashier’s check for payment. Many times, the person is from a foreign country stating they have a business associate in the U.S. who will send you the cashier’s check.

Then, for some reason, the buyer informs you that the cashier’s check was made out incorrectly in an amount larger than your asking price. The buyer asks you to deposit the check and then wire them the excess amount or give the excess in cash to whoever picks up the item you sold.

You receive the cashier’s check and it looks real. You take it to your financial institution where they deposit the check into your account. The trick of the cashier’s check fraud is that the buyer’s financial institution credits the seller’s account, usually within a few days, before the funds have actually arrived from that financial institution. Therefore, it looks like the funds have cleared and everything is okay. You go ahead and wire the excess back to the buyer and ship the item you’re selling.

Within a few weeks, you receive notice from your financial institution letting you know the cashier’s check was counterfeit. You will then be responsible for paying back the entire amount of the cashier’s check. The amount you wired is gone along with the item you shipped.

Warning Signs

  • A buyer sends a cashier's check for more than the purchase amount.
  • "You won!" phony lottery check is sent to you.
  • A check is purchased by someone other than the one you're dealing with.
  • A check has misspelled words or is printed on flimsy paper.
  • You receive a request to "convert" a cashier's check into a personal check. (You can keep the "extra amount" for your efforts.)

How to Protect Yourself

  • If you don't know the person, confirm their name, address, and phone number using a phone book or directory assistance.
  • Insist on an official check from a local financial institution or one with a branch in your area.
  • Call the financial institution to verify that the check is valid. Look up the number yourself, don't call the number on the check.
There are countless variations on this scam, including e-mails that inform you of winning a contest or that some dignitary needs help moving funds out of his country. So be suspicious of anything that requires you to send money back to someone you don't know. Watch for anything that appears suspicious and trust your instincts. If you suspect fraud, ask R.I.A. Federal Credit Union for help.