Keeping your finances safe and secure is of optimal concern in today’s environment, which is why cashier’s checks are often trusted over personal checks or electronic payments to transport large amounts of money. However, even the most reliable of checks are not impervious to hackers and can be used to scam unsuspecting individuals out of hundreds or thousands of dollars.
Cashier’s checks are drawn directly from a financial institution’s funds, signed by a cashier or teller, and guaranteed by the bank – legitimizing their use and making them perfect for scams. Funds from a cashier’s check are often “available” within a few business days, but that does not mean they belong to the depositor. If the check proves to be fraudulent, which could take weeks, the financial institution that accepted the check will remove the funds from the account and hold the depositor responsible for the full amount of the check. If the consumer has already spent the funds, or in many cases, transferred all or a portion of the money back to the person who sent them the fraudulent check, they have irreversibly lost what could be a large amount of their own money.
Let’s take a look at how a cashier’s check scam would typically play out:
A person is selling a lawnmower online for $100. A “buyer” is interested in purchasing the mower but insists on using a cashier’s check. When the check arrives, it is for $150, which the “buyer” says to deposit, then return the excess money in cash via wire transfer. A week later, the seller’s bank notifies them the check is fraudulent, the funds have been removed from their account, and the seller is responsible for the $150 loss.
Notice the three hints or giveaways in this scenario:
- The “buyer” insists on using a cashier’s check or money order
- The check is for more than what was required
- The “buyer” requests the excess money be sent back to them or to a third party
Scammers are continually developing new and improved ways of gaining access to your finances. Here are a few tried-and-true examples, in addition to the one above, to help you prepare and defend against cashier’s check scams.
Work-at-Home: Often referred to as a work-at-home check-processing job, you receive cashier’s checks as payments to deposit into your account, then forward to someone else. Without realizing, you could be laundering money for criminals or losing your own money via fraudulent checks.
The Mystery Shopper: A stranger contacts you stating you were selected to be a mystery shopper! They send you a cashier’s check to deposit into your account, use to shop at designated stores, wire a portion to a third party, and then allow you to keep the remaining funds. The check proves to be fake, and you have lost the money you spent in stores and sent to others.
Lottery or Inheritance: Congratulations, you’ve just come into a large sum of money! A letter detailing your winnings contains a cashier’s check, which you are instructed to deposit into your account and wire a portion to a third party to cover legal fees or taxes before your funds are released. Unfortunately, your winnings never arrive and you are out the funds you transferred for the fake legal or tax fees.
Foreign Wealth: A stranger sends you a cashier’s check to deposit and send to a “helper” as a tactic in transferring funds out of a “corrupt nation.” But, you get to keep a small portion of it. The check turns out to be fake and you’re responsible for the full amount.
Property Rental: Someone who is starting a new job in the area is interested in renting your property and sends you a cashier’s check covering first and last month’s rent and security deposit without seeing the home. After you’ve deposited the check, they say there was a problem with the job, will not need the rental, and ask for some of the rent money back. You send the refund only to find out the check was fraudulent and you’ve lost the money.
Be Smart, Be Cautious
A faulty cashier’s check can be tricky to spot, as scammers try to make them look as legitimate as possible to fool you. And once a fake check is deposited into your account and funds are sent to others, there is little action you can take to get your money back. Knowing this, it’s important to:
- Never accept checks from someone you don’t know.
- Do your research – call or visit the financial institution in which the check is drawn on to find out if it is real.
- Verify the check has cleared and the funds are in your account before sending any merchandise or money to anyone.
- File any paperwork associated with the check –it might come in handy if the check turns out to be fake.
If you fell victim to a cashier’s check scam, report it immediately to your financial institution, the issuer of the check, the site or service where you met the scammer, the U.S. Postal Service and your state attorney general’s office if the check came via mail. Additionally, you can submit a Consumer Complaint to the Federal Trade Commission.
Visit our fraud protection page to learn more about the latest scams and how APGFCU is working to keep you safe!