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Scam Alert

"The Check Has Cleared" Doesn't Mean The Check Is Good

By Mark Huffman
ConsumerAffairs.com

June 5, 2006
If a bank teller informs you a check has cleared, that doesn't necessarily mean the check is good.

In fact, a growing number of people are being victimized by a banking law loophole that works to the advantage of criminals running fake check scams.

The rules require banks to release funds from a customer's deposit within five days, giving consumers speedier access to their money.

But it could take weeks for the bad check to finally bounce. Any money from that deposit the customer has spent must be returned to the bank.

Scammers have exploited the law by deceiving victims into depositing fake checks, then wiring a smaller amount back. The money the consumers deposit doesn't exist, but the money they send is very real.

The banks say it's up to consumers to be better judges of whether a check is good or not.

In a recent "fraud alert," the American Bankers Association said 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."

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