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New Scam Uses Counterfeit Checks

June 2, 2004
Consumers should watch out for a scam in which swindlers “buy” items on the Internet with counterfeit cashier's checks greater than the purchase price and then ask sellers to return the difference. The bogus check bounces, leaving the seller owing the bank the entire amount.

The scam artists, usually from overseas, typically target online sellers of expensive items, such as cars. In a variation of the scam, consumers receive calls telling them they have won a large prize and telling them to remit part of a cashier's check to pay “expenses.”

"Consumers selling items on line should immediately reject offers to pay with cashier's checks greater than the agreed-upon price," said Connecticut Attorney General Richard Blumenthal, whose office uncovered the scam.

"These seemingly simple transactions are scams intended to relieve sellers of their cash. A buyer or business has no legal or legitimate reason to send a check larger than the sale price," Blumenthal said. "Alarm bells should go off the moment someone from overseas offers to pay with a cashier's check. Wiring cash from a cashier's check will line the scam artist's pocket while picking yours."

Phony buyers sometimes offer explanations for the cashier's check being greater than the purchase price. The purchaser may claim the check was mistakenly made out for a greater amount, is a refund from an unrelated transaction, or includes transportation or import/export fees that need to be refunded. The scam artists typically ask the seller to wire money to a foreign country via Western Union.

In another scenario, the swindler claims that he has to pull out of the deal because of a tragic accident or other unforeseen circumstance and asks for a refund of the cashier's check. He may even offer to let the consumer “keep” a small amount of the payment as compensation for the inconvenience.

Steps consumers can take to avoid such scams include:

• Read all alerts related to Internet sales.
• Be wary of prospective “buyers” who send e-mails from overseas, want to pay more than the purchase price and ask pay by cashier's check but then cancel the transaction and ask for a refund.
• Do not assume that the cashier's check has cleared and is not counterfeit even if your bank says that funds are “avialable.”
• Do not withdraw cash or write checks on any cashier's check until the check has cleared, and there is no risk that you will have to reimburse the bank.
• Check with the bank which issued the cashier's check. Aask if it has had problems with counterfeit cashier's checks.

If you are the victim of a counterfeit check cashing scam, submit your complaint to FDIC's Special Activities Section, 550 17th St., NW, Room F-4040, Washington, D.C. 20429, or send your information electronically to alert@fdic.gov.

July 20 2008

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