Cashier's Check Scams & Fraud: How to Spot, Avoid & Report Fake Checks

Cashier's Check Scams & Fraud: How to Spot, Avoid & Report Fake Checks
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When issued from a real bank or credit union for a legitimate purpose, a cashier's check offers advantages that a personal check can't provide and is safer than handing over a lot of cash. The recipient knows for sure they'll get the money since the issuing bank has guaranteed it from their account upon the check writer's request and payment for a cashier's check. However, there are plenty of scams out there that involve receiving a fake check. You can lose money or even face legal issues if you fail to spot the fraud, fall for it and cash that check. Read on to learn all about spotting, avoiding and reporting cashier's check fraud.

Understanding Cashier's Check Fraud

There are many types of cashier's checks and scams that people can fall for, but they usually all involve receiving a check that may look real at first but actually is fake. This check may be for a solicited purpose like the sale of a vehicle or gadget, or it may come unsolicited with some story or instructions attached. By the time you discover it's a fraud, you may have unfortunately already handed over the item for sale or followed through with a scammer's instructions for wiring money or providing confidential information that could cause identity theft or lead to financial loss.

While someone legitimate will obtain a cashier's check through a real financial institution, scammers use computer software to generate cashier's checks that can look real to both the recipients and banking professionals. When you try to go cash the cashier's check, a big problem can occur since the bank may not always pick up that it's a fake, so the money may still show up available in your account initially. Since you don't know the check's fake and will eventually bounce further down the verification process days or even up to a couple of weeks later, you might end up spending money you really don't have.

When the fake cashier's check bounces and those funds get taken back, the bank usually holds you liable. This means you can end up wondering how to return the money as well as pay any fees for a bad check or overdrawn account. At the same time, you may have already lost the item sold or sent money to the scammer and have a hard time trying to recover the loss. You can also end up with issues as other transactions like important bill payments fail while you remedy the situation.

Exploring Cashier's Check Scam Examples

Spotting a cashier's check scam requires knowing the common tactics these scammers use so that you can avoid becoming a victim. Some scenarios where you may get a fake cashier's check include:

  • Online purchases and rentals: If you use websites like Craigslist or eBay to sell items, you can encounter plenty of scammers who will ask if they can pay for your item with a cashier's check. If you agree, they may actually send the cashier's check for an amount higher than they owed you, and they may ask you to return part of the money due to their mistake. On the other hand, apartment and house rental websites can have scammers offer you an appealing amount of money to rent your property and give you a fake cashier's check without your knowledge. In either case, you lose out on an item or money.
  • Foreign lottery scams: You've probably heard of the common scam where you get an email or letter that some rich family member, politician, charity or some other person in another country has won the lottery and wants to let you in on their winnings – but only if you'll send them some money first. If you see the large amount of money offered and fall for this fraud, you may receive a cashier's check in the mail that the scammer instructs you to use for some related fees for a wire transfer. What happens is that you can end up using a fake cashier's check plus losing the money you've already handed over to the scammer, and no lottery winnings will ever arrive.
  • Fake job offers: With many people wanting to work from home, scammers have caught on to the trend and created a scheme where they post fake job listings or even email random people job offers. Often, these jobs will mention you'll make a lot of money and put in little work or time. For example, you may get offered a mystery shopper job, customer service role or mail forwarding position. In any case, you'll be sent a fake cashier's check for your time or as part of some secondary task like verification, and cashing it successfully leads to the accompanying bank account problems and losses.
  • Other unsolicited gifts: Sometimes, you'll simply receive a cashier's check that the scammer says is a gift for something, very much similar to the foreign lottery scams. Again, you usually get asked to wire a little money in exchange for this gift before you try to cash the fake cashier's check and face the headaches involved if successful.

Identifying Fake Checks and Scams

If you suspect you might have a fake cashier's check, it helps to know some common indicators before you simply visit a place that cashes these checks. Scammers have become more sophisticated in the technology used, but you can try these tips to detect if your cashier's check might not be real:

  1. Look at the bank name and research to find out if it actually exists in the location where the sender is.
  2. Look for a bank phone number on the check since fake checks may not have one.
  3. Consider the check's appearance to see if it looks low quality, strange or missing common security features as if someone just printed it from home.
  4. Pay attention to the check amount to see if it looks correct or just too good to be true.
  5. Make sure the check actually shows the name of the payee and make sure you know and trust that person.
  6. Check for odd mistakes like simple grammar errors or notes on the check.
  7. Research the bank, payee and any communications you received online to see if other victims have reported the same scam.
  8. Try copying and pasting parts of an email the scammer provided since they usually use much of the same text for other victims.
  9. If in doubt, explain the situation and show the check to a bank representative for further investigation.

Avoiding Falling for These Scams

The Federal Trade Commission offers some simple advice on avoiding cashier's check scams. Simply put, if you receive some offer that seems suspicious or too good to be true, then don't respond to it and surely don't cash any suspected fake cashier's check. If selling something online, try to use payment options with fraud protection like a credit card or PayPal, be careful when dealing with buyers outside the United States and don't send something before receiving payment. And if anybody says you need to send them money in advance to get a job or gift, know that you're likely dealing with a scam.

Reporting Cashier's Check Fraud

If you ever receive a fake check, hopefully you avoid cashing it and losing money in the first place. But in any case, your first step should be to let your bank know all about the situation and show them the check if they don't already have it. While there's no guarantee you'll get your money back if you already fell for the scam, at least the bank will have the information to possibly prevent future victims.

As a next step, you should file a complaint through the FTC and provide all evidence available about the transaction. This means the date and content of any communications, any money you've lost during the fraud, information about the check and the scammer's identity and your personal information. The FTC coordinates with the proper law enforcement agencies to research the crime.

The Better Business Bureau offers a scam tracker where you can report the fake check as well. You can try reaching out to your state's attorney general, the Federal Bureau of Investigation and U.S. Secret Service. And if the check came through regular mail, you'll want to contact the United Postal Service at a local post office, by phone or online and have the check and any accompanying packaging readily available.