You Will Be Liable If Your Bank Accepts A Bogus Check, Even If It 'Clears'

ScamBuster · #1 06-14-06, 04:35 PM

Quote:

You Will Be Liable If Your Bank Accepts A Bogus Check
Even If It 'Clears' The Bank

By CAROLINE E. MAYER
Washington Post
6/11/2006
L.A. Times/Washington Post

John Schaefer lost $5,000 in a check scam, even though his bank twice told him the overseas check he had deposited was good.

Trying to sell his 1968 Mustang online, John Schaefer received what appeared to be a firm offer from an overseas classic-car dealer. The buyer sent Schaefer a check for $14,000 even though Schaefer was asking only $8,000. The buyer said the extra money was to cover shipping and directed Schaefer to wire him the difference.
"It seemed kind of funny, and I had some hesitation," said Schaefer, who deposited the check in his bank's ATM over the weekend. On Monday, he asked a teller to see if the check was good. She went to the backroom and returned assuring him "there was no problem," Schaefer recalled.

On Wednesday, "still not feeling quite right," Schaefer asked the same teller to make sure the check was good. That time, the teller told him the check had been cleared and he was "all set." Schaefer withdrew $5,000 and wired the money to the buyer.

Four days later, as he reviewed his account online, he discovered the check was not good. Even worse, the bank was demanding that he repay the $5,000.

"Had I made the deposit and not tried to make sure it was legitimate, I should have full obligation to make good on it," said Schaefer, 34, of Brattleboro, Vt. "But I checked with the bank twice, and now I find out they have no accountability."

Schaefer is one of thousands of consumers who have been victimized by an increasingly common check scam that relies on the vagaries of the banking system to succeed.

Federal rules require banks to release funds from a consumer's deposit quickly, usually within one to five business days, depending on the kind of check. However, it can take weeks before a bank discovers a check is fraudulent.

So when a teller says "the check has cleared," the teller is "usually thinking in terms of bank rules, that the hold time is over, and the consumer now has access to the funds," said Susan Grant, director of the National Fraud Information Center.

But the average consumer thinks that phrase means "the check is not fraudulent."

When that happens, it is depositors who are responsible for the money, she said. As the American Bankers Association explains in a "Fraud Alert!" statement insert it distributes to banks to send to customers: The consumer is the one dealing directly with the person who sent the money and therefore is "in the best position to determine how risky the transaction is."

To facilitate the flow of funds behind the 40 billion checks processed each year, banks are required to release funds within a few days, said Nessa Feddis, senior federal counsel for American Bankers Association.

If tellers start asking a lot of questions or start holding checks until they are determined to be good, banks "might be perceived as trying to circumvent the rules entitling people to withdraw funds," Feddis added. It would only be a matter of time before they were hauled before Congress and "accused of trying to hold on to people's funds," she said.

That provides no comfort to those who have gotten caught in scams. "I want security more than fast check-cashing and money flying all over the place," said Toni Gaston of New Jersey, who was the victim of an Internet work-at-home scam earlier this year.

She accepted a "job" with an international charity based in Ukraine that builds homes for people in disaster areas. Her assignment was to deposit local donations into her own bank account, wait for the checks to clear and then wire the money to the charity, less her commission.

Gaston received a $4,500 cashier's check and immediately deposited it. The teller told her it would take three days to clear. A few days later, Gaston reviewed her account online and saw the funds were in her account.

She wired $3,900 to the "charity," supposedly keeping the rest as her commission.

Days later she found out the cashiers check was fake and she owed her bank $3,900.

Source: The Buffalo News

POSSIBLE CONSEQUENCES

Scrub · #2 11-19-06, 10:52 PM

Police warn of gift check scam
By Daily News Staff
Saturday, November 18, 2006

HOLLISTON -- Police are warning the public about a scam involving fake American Express gift checks that some local residents have received.

In at least two instances, residents have been mailed envelopes containing packages of the purported gift checks, which carry a denomination of $500, said Officer Chad Thompson. The problem, he said, is that American Express does not issue $500 gift checks. The top denomination the company offers is $100.

In the scam, a few days after receiving the gift checks, recipients get a phone call from an anonymous person asking if they have received their "client's" checks, Thompson said. The scammer then asks the recipient to cash the check and split the proceeds with the "client" and arranges to pick up or receive the cash, he said.

A small check-cashing operation, gas station or store that redeems the check will eventually discover from a bank that the check is worthless. The person who cashed the check would then be stuck coming up with the money, Thompson said.

In the two local cases, the recipients had doubts and called police before any transaction was made, Thompson said. Police continue to investigate.

http://www.metrowestdailynews.com/lo...ticleid=145658

techcrafters · #3 03-08-07, 06:25 AM

As someone with over 20 years of work history in the banking field, I have seen far too many scam checks come across the teller line in recent years and the numbers are increasing all the time. Where at one point, most banks felt confident about accepting money orders as a cash item, these have become suspect items as well lately, particularly Postal or International Money Orders. If you are selling items of any kind and accept personal checks or money orders as payment, I strongly suggest holding off on shipping out any item sold for at least 10 business days, to allow any bogus items to be returned to the bank. Leave the money deposited in your account until after this period has passed. In most cases, bad checks will come back within 5 or 6 days, but may take longer.

Even though the holds placed on a deposited check will clear in just a few days, that deposit cannot be considered safe for several business days beyond the hold period. Be careful and be patient!

Scrub · #4 04-06-07, 12:34 PM

More bogus checks show up around South Georgia

April 2, 2007

Albany -- What would you do if a check for thousands of dollars showed up in your mailbox?Your first thought may be to get to the bank. But if you cash that check, the bank may just come looking for you.

One Albany man who knew it was a phony and wants to warn you as well.

"It looks very good." As a disabled vet, Ezekiel Gaines is used to receiving a check at the beginning of the month. But today, he received a rather large one.

"I know nobody's gonna give me $2,000," he says.

The check, which looks like the real deal, could have caused a real mess for Ezekiel had he decided to cash it.

"It's just a scam," says Dougherty County Sheriff's Lt. Craig Dodd. That's right, a scam. A letter that accompanied his check told him to cash it, send most of the money back and then he would receive even more money-- a total of $61,000.

So we called the number on his letter in Winnepeg to speak with the Scammers themselves. Surprise-- no answer.

"If a deal is too good to be true, then that's what it is, it's not true." Lt. Dodd says these types of scams are increasing in popularity and in the amount of people falling for them.

"They tell you to send so much back and so you think, I really can't lose because I have this check and it's going into my account and I'm only sending back part of it, so I still, no matter what, I've got the money."

But in reality, they have your money, and you've just taken the bank's. So instead of cashing a check that you weren't expecting in the first place, Ezekiel has some advice for you.

"Sit down, throw it in the fire place. Throw it in the garbage can, but tear it up."

A lot of times, scams like this will originate from outside the U.S. Mr. Gaines' check came in the mail today. You may have one also, but don't cash it-- you'll regret it.

If you're ever in doubt, bring all information with you to the bank. They can help you determine if it's a scam or not.

Feedback: news@walb.com

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