Counterfeit cashier's check scams
By WORLD Law Direct, New York [February 1st, 2011]
You are selling an item over the Internet – it could be a used car or motorcycle, jewelry or even bred animals. You receive an email offer to purchase your item and the buyer says he'll send a bank cashier's check. The buyer is from Nigeria or "West Africa", but has a business associate in the United States who will send you the cashier's check. Then you are told that for some reason the check was already made out to you for an amount larger than your asking price. The buyer asks you to please deposit the check, wait for it to clear, and then send him the difference – "but only after the cashier's check clears, of course."
You are skeptical – but, sure enough, the bank cashier's check arrives by Fed Ex, it looks real, your bank accepts the check, and the bank assures you the funds are in fact available. So you wait the time the bank recommends to verify that the check is clear and then you wire the difference to your buyer in Nigeria and prepare to ship your item.
A week later your bank calls: "We're very sorry, but the cashier's check was counterfeit" – a superb copy, but worthless. Your account is frozen. You must pay the bank back the entire amount of the cashier's check. You may even be considered a fraud suspect yourself.
Your "buyer" disappears. About the only good news: sellers rarely get to the point of shipping their items abroad.
How to Protect Yourself
If you are selling online, be extremely skeptical of any offers:
- from overseas to a party you do not know;
- paid by cashier's check;
- from buyers sending more than the purchase price of the item;
- from buyers who seem more worried about payment than the shipment of the item to them once payment is made;
- from buyers who show little or no concern to the condition of the item they are purchasing.
Also, a bank may make money "available" to you almost at once if you deposit a purported bank cashier's check, but that's NOT a guarantee the check is authentic. It could be returned as counterfeit up to three years later, and the bank will hold you responsible for the money.
Ways to verify a check include:
- Inspect the check carefully to ensure it contains all the legal elements of a check.
- Amount of the check, in figures and words, should match. Often this amount is machine "impressed" on official bank checks.
- Account number should be encoded in MICR ink (should not be shiny in appearance).
- Ensure the drawer’s signature appears on the check; watch for tracing lines, "shaky" writing. Often facsimile signatures are used on official bank checks, with a second, original signature required for amounts exceeding a designated dollar amount.
- Perforations – checks are generally perforated on at least one side.
- Routing and transit numbers appearing in the MICR line and elsewhere on the check should be consistent.
- Inspect the check for erasures, errant marks, such as additions or deletions, or other alterations.
- Contact the financial institution on which the check is drawn for authentication that the check is valid with no outstanding claims for loss, stolen or destroyed instrument. Verify if the person whose signature appears on the check on behalf of the bank is authorized to sign official checks of the bank.
- IMPORTANT: Independently verify the item to verify its authenticity. Do not rely on information printed on the face of the check, such as phone numbers or name/location of bank, because in a convincing scam, these numbers will often connect directly to the scam artists or their associates.
- Find the bank’s telephone number from a reliable source, such as a bank directory, the bank’s web site or directory assistance.
- Verify as much information as possible – check number (is it in normal sequence of other official checks issued by the bank), payee, issue date, amount and authorized signatory. Ask if the bank’s official checks bear any security features, such as watermarks, security threads, background patterns, high-resolution borders, void pantograph, etc.
If there is any doubt as to the collectibility of the check, do not accept the check for deposit or encashment. Send the check to the issuing financial institution for collection. Ask that proceeds be wired directly to the customer’s account.
As an alternative to sending the item for collection, deposit the check to the customer’s account, and place a Reg. CC exception hold. Under Reg. CC, the entire amount of non-local checks can be held for up to 11 business days before making the money available for customer’s use, if the bank can evidence "reasonable cause to doubt collectibility." In the case of a cashier’s check or other official check of a bank, if the check contains any questionable feature, erasures, alterations, etc., the depositary bank has a "reasonable cause to doubt collectibility."
Iowa Bankers Association Bulletin