If you’re reluctant to take someone’s personal check for fear that it’s no good, don’t assume that a cashier’s or bank check is any safer.
Counterfeit cashier's check fraud remains alive and well. You can see for yourself just by visiting the website of the Office of the Comptroller of the Currency. That agency alone has received nine reports of counterfeit cashier’s checks so far this year.
Fake cashier’s checks and money orders are used to promote scams, such as those involving foreign lotteries, or to pay for cars and other expensive items being sold on auction sites and elsewhere. Today’s advanced printers and scanners make it easy to produce cashier’s checks that look real.
And just because a financial institution accepts a check and makes the money available for withdrawal from your account doesn’t mean you’re in the clear. If you bank finds out days or even weeks later that the check was fake, it’s going to want its money back.
For more information, read our report "Don't get stuck with fake bucks."
What to do
Don’t blindly accept checks. Whether it’s a casher’s check, bank check, or money order, treat it with the same caution you’d use for a personal check.
Verify with the issuing bank. Before accepting a cashier’s check, contact the issuing financial institution to verify its authenticity. But don’t use the phone number that’s printed on the check. It could be a fake, too. Better yet, if you’re selling a car, jewelry, or another expensive item, ask the buyer to draw the check at a local bank or one with a local branch and then call or visit to verify. An even safer alternative is to cash the check at the issuing bank, although you might have to pay a fee if you don’t have an account there.
Use a third party. Another option is to use a payment processing service, such as PayPal, or an escrow service, such as Escrow.com, that holds the money until it clears. Keep in mind that fraudulent escrow services have surfaced in recent years. And escrow service fees can be steep.
Don’t wire money. Beware if someone gives you a cashier’s check and requests that you wire back a portion of the money after cashing it. The person may say that the check is for prize winnings for a foreign lottery and that you owe taxes. Or it might appear to be a mistaken overpayment for a product or service, with a request that you return the excess amount. No matter what the reason, a request that you wire or otherwise return a portion of the money is a good sign it's a fake check scam.
Beware of cash, too. Be careful also if someone wants to pay for a major purchase with cash. It could be counterfeit money. Suggest meeting the person inside your bank and having a teller deposit the money to your account or convert it to a check or money order in your presence. Never meet an unknown person at an ATM.
Make an insurance claim. If you are victimized by a fake check scam or receive counterfeit cash, check your homeowner’s or renter’s insurance policy. There’s a good chance you’re covered for a loss of $500 or $1,000, depending on your insurer. There's typically no deductible.
—Anthony Giorgianni
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