A cashier's check scam is usually easy to spot, especially in the case of the most common scam, involving the issuance of a fraudulent cashier's check in excess of an agreed upon amount, with a request to forward the excess to a third party. The victim of the scam forwards the funds as requested, only to find that the check didn't clear. Being alert to scams using cashier's checks can help people avoid financial losses and it is important to be aware that such scams are especially common on the Internet, where it is common practice to do business with people in a variety of locations.
Many cashier's check scams rely on the fact that banks are obliged to make the funds from a cashier's check available within a certain number of days, even if the check has not yet cleared. Someone depositing a check on a Monday would see the funds on Thursday, for example, even if the bank hadn't actually cleared the check. People should be careful about accepting cashier's checks and should always check with the bank to see if the funds have cleared before taking action on a transaction involving a cashier's check.
The most basic cashier's check scam involves a person sending a fraudulent check in payment for goods. The payee deposits the check, sees that it appears to have cleared, and ships the goods to the buyer. After several days, the check fails to clear, the funds are deducted from the customer's account, and the seller has lost the goods mailed to the buyer. Waiting for the funds to fully clear before mailing or transferring goods can help people avoid this scam.
Another kind of cashier's check scam involves a buyer sending a check in excess of the sale amount. There is usually a reason given for this, such as a “mistake” when issuing the check, or a desire to forward money to a third person through the seller. The seller is asked to deposit the check and then send the excess on to another person. This scam is easy to avoid by refusing to accept oversized cashier's checks, as they are almost always fraudulent.
Other scams involve promises that someone has made a windfall of money or is being given money for mystery shopping. The person deposits the check, spends money under the assumption that it is available, and is out that money when the check fails to clear. In some cases, people are asked to deposit a large check and send some of the money to another person, which is a red flag. Generally, when people inherit money or are sent funds for mystery shopping work, there will be accompanying documentation and information. A contact out of the blue can be a sign that someone is attempting a cashier's check scam.
People concerned about cashier's check scam attempts can avoid cashier's checks in transactions whenever possible, and contact the bank a check is drawn upon to see whether it is valid if they are in a situation where they must accept a check. It's also advisable to wait for such checks to clear when they are deposited. Consumers may also want to be aware that the use of forged money orders is also an issue in some regions of the world, and it's important to wait for money orders to clear before spending the money.