If It Sounds Too Good To Be True, It Is
How To Protect Yourself Against Cashier's Check Fraud
from the ABA Education Foundation
Online auction sites are a popular way to buy and sell collectibles, jewelry, even cars; however, internet auction transactions are not always safe. A new fraud, the cashier's check or "advance fee" fraud has become more prevalent as online auction sites and classified ads have gained popularity. In many cases, large ticket items lure this type of fraud artist to a victim.
The typical fraud scenario is somewhat confusing, which is probably one of the reasons why the fraud artist is successful.
Let's say you post an ad for your car on an online auction Web site for $3,000. A foreign buyer bids on the car for the full asking price. When payment is arranged the buyer says there is someone in the United States who owes him money. The person who owes the buyer money offers to send you a cashier's check for $5,000 and asks that you wire back the difference to the buyer. You agree because they offer you a small commission for brokering the deal. You receive the cashier's check, deposit it, and because cashier's checks are mistakenly thought to be as good as cash, wire the leftover sum to the buyer. Ten days later your bank informs you that the cashier's check was fraudulent and that you're responsible for any money you've drawn against it. Unfortunately, you've lost your money and merchandise to a scam.
There are variations on the scheme as well. A seller could just as easily attempt to scam you, and not all scammers are from outside the U.S. Cashier's Check fraud is growing as auction and classifieds Web sites become more popular.
Online auction fraud registers the largest number of complaints to the FTC's Consumer Sentinel database. But don't give up your addiction to online auctioning yet. If you safeguard your identity, take your time transferring funds, and keep alert for possible scams, your risk of becoming a victim will be going, going, gone.
Check Scams in Your Mailbox: WJLA ABC 7 News Story on Cashier's Check Fraud
The American Bankers Association offers the following tips to protect consumers from cashier's check and "advance fee" fraud schemes:
Use caution when dealing with foreign buyers and sellers.
Beware if the buyer or seller asks you to send money quickly. Banks often take 10 days or more to determine if a cashier's check is counterfeit. Do not ship the goods or spend any of the funds sent to you until 10 days to two weeks after you deposit the cashier's check.
Insist on a cashier's check drawn on a local bank, or a bank that has a local branch. Insist on a cashier's check for the exact amount.
Check the FDIC's Institution Directory to make sure the bank is legitimate.
These fraud artists tend to target vulnerable people, senior citizens and young adults. Alert any family members who may be at risk.
No legitimate company will offer to pay you by arranging to send you a check and asking you to wire some of the money back. If that's the pitch, it's a scam.
Become familiar with any auction site you visit online. Find out what protections the auction site offers buyers and sellers. Don't assume the rules are standard for all auction sites.
Find out as much as you can about the other party you're dealing with on an online auction site. Be wary of those who try to lure you away from the Web site with promises of a better deal.
Save all transaction information.
Protect your privacy. Never provide your Social Security number, driver's license number, credit card number or bank account information.
Never agree to travel to meet your buyer or seller.
For more tips and information, visit the following:
Don't get taken in by a fake check scam! ABA and the U.S. Postal Service have developed a Web site to educate consumers about fake check fraud. Check out the campaign.
Questions? Contact ABA Education Foundation.