Cashier's Check Fraud & Scams
Published: October 4, 2022
Consumers and merchants often rely on the security of cashier’s checks for major transactions such as the purchase of a home, car or jewelry. But “security” in this case simply means that cashier’s checks won’t bounce because the issuing banks take full responsibility for covering payment. They aren’t, however, secure from fraud and scams.
Printing technology has grown so advanced over recent years that it’s relatively easy for scammers to forge cashier’s checks in their own basements. As a result, even bank employees may find it difficult to detect a fake, and it can take weeks before a counterfeit cashier’s check is discovered. What’s more, if you spend the funds prematurely, you’ll be liable for the unpaid check (and the resulting fees) once the bank discovers it’s fraudulent.
To help you protect yourself from such crimes, we’ve laid out instructions for verifying the validity of cashier’s checks, spotting the fake ones and reporting an incident if you are ever victimized in a scam below.
Common Types Of Cashier’s Check Scams
Cashier’s check scams come in various forms. The following details the most common among them:
- Work at home scams
You receive payments via a cashier’s check and you’re supposed to deposit the payments to your account and forward the money to somebody else. Often advertised as a work-at-home check processing job, these schemes are often problematic. In some cases, you’re laundering money for criminals. In other cases, the first few payments are fine, but eventually you’ll get a fake check (after they’ve gained your trust) and you’ll lose money. - Mystery shopper scams
You are informed that you have been chosen to act as a mystery shopper. You receive a cashier’s check and are told to deposit the check into your account. You are instructed to use a portion of your funds to purchase items at designated stores, transfer a portion of the funds to a third party using a wire service company, and keep the remainder. The cashier’s check turns out to be fraudulent and you are out the money you have spent and sent. - Cashier’s checks used to purchase goods, services
You sell products, and a buyer sends you a cashier’s check for the price you have agreed on. You ship the goods to the buyer and find out that the cashier’s check is fraudulent. - Foreign lottery scams
You have won a foreign lottery, or someone related to has died and you have inherited a bunch of money. The letter you receive usually comes with a cashier’s check. It says the check is to help cover the taxes and fees associated with claiming your prize money. You just need to deposit the check into your account, and wire part of the money to cover those taxes and fees back to the people who sent it to you. You get to keep the rest of the money you deposited, and the full amount of the prize money you’ve “won.” Of course, the money you are promised never shows up, and you are out the fees you have paid. - Property rental scams
Somebody looking to rent your property is willing to pay the first and last month of rent (and security deposit) with a cashier’s check before they ever see the property due to purportedly taking a new job. The day after you deposit the check, they say there was an issue with the job – they’re not coming, so they don’t need the rental. You can keep the security deposit, but they’d like for you to return some of the rent. After you send the refund, you’ll find that the check was a fake.
How To Spot A Fake Cashier’s Check
What does a fake cashier’s check look like? It’s hard to tell. Neither consumers nor bank tellers know what to expect because every bank uses a unique design that’s intended to make counterfeiting its cashier’s checks difficult. Fakes also can be hard to distinguish when they’re created using high-quality home scanners and laser printers that lend the checks an appearance of authenticity.
Look for the signs listed in the following table to help you spot a fake cashier’s check.
| What To Look For | Description |
|---|---|
| Check Origin | A genuine cashier’s check will display a legitimate bank name, but many fakes will too. You can tell a check is fake if you can’t find legitimate information about the issuing bank online or if the check was mailed from overseas (as is often, but not always, the case). |
| Check Amount | Fakes are often written in an amount far exceeding the amount required, which is intended to coax the victim into wiring back the balance to the scammer. |
| Safety Features | Fakes are sometimes missing security thread, watermarks, microprints, color-shifting ink, instructions for the bank teller (on the front or back of the check), etc. On the other hand, they may contain these features — but in poor quality. |
| Payee Name | The payee's name should already be printed on a cashier’s check (this is done at the bank by a teller). If the payee line is blank, the check is fake. |
| Bank Phone Number | A genuine cashier's check always includes a phone number for the issuing bank. That number is often missing on a fake check or is fake itself. |
| Suspicious Communication | Scammers often communicate with their victims using poor grammar/spelling or vague language. They may also refuse to meet in person or send an email or a text message indicating they’re not from your area. |
| Fraud Alert | The Office of the Comptroller of Currency (OCC) announces reported fraud cases on its website. If you received a cashier’s check from one of the implicated institutions — especially near the date the fraud was announced — you may have a fake. Keep in mind that the list includes only reported cases. |
How To Verify A Cashier’s Check:
Although the signs described in the above table may indicate forgery, they do not always guarantee that a cashier’s check is fake. It’s always a good idea to call or visit the bank before cashing or depositing a cashier’s check, whether or not you doubt its validity. However, do not contact the number that’s printed on the check, as it’s likely also a fake. Instead, search for the institution’s phone number online. Sometimes, the scammer will also use a legitimate routing number and account number on a check, so the bank will have to inspect the check for other indications of fraud.
What To Do If You’re A Victim
Even the most cautious consumers can fall victim to cashier’s check fraud. If you find yourself in such an unfortunate situation, you need to report the crime immediately to the following:
- The bank where you deposited the check
- The bank that supposedly issued the check
- The website or service where you encountered the scammer
According to the Office of the Comptroller of Currency, banks are ordinarily required to reimburse their customers for forged checks. However, that all depends on the circumstances of your case and your state’s laws. The bank can choose to investigate whether you deserve to be reimbursed, a process that may require you to first obtain a police report and file an affidavit.
However, a bank also can hold you liable for the entire amount of an unpaid cashier’s check then reverse the transaction upon discovering fraud. It will be your responsibility to pursue the party that issued the fraudulent cashier’s check to you.
If you think the bank did not handle your case properly, seek advice from an attorney about the applicable laws in your state — if you can afford to and if the amount of the check makes the dispute worthwhile. If you earn a low income, you can visit your local legal aid office.
In addition, you should file a complaint with the following agencies or authorities to warn others and possibly get action on your case:
- Federal Trade Commission (FTC)
- U.S. Postal Inspection Service
- State Attorney General
- U.S. Secret Service - Financial Crimes Division
- Federal Bureau of Investigation (FBI) - Internet Fraud Complaint Center
Tips For Avoiding Cashier’s Check Fraud
At some point, most people will buy a car or a house in addition to other major transactions that require a relatively safe payment tool. By following the tips below, you can avoid becoming a victim of a scam or fraud if or when it’s time to use or accept a cashier’s check:
- Steer Clear Of Strangers: When it comes to financial transactions, a good rule of thumb to follow is to never accept a cashier’s check from someone you don’t know. It also helps to do business only with local people whose identities you can verify through a phone directory, for instance. Many scam artists operate from foreign countries. And if a buyer or customer instructs you to wire back funds before or after depositing a cashier’s check, this should raise a red flag that the check is fake.
- Go To A Local Bank With Your Buyer: If it’s necessary to accept a cashier’s check for a good or service you’re providing — especially for large transactions — you should ask to meet your customer at a local bank (or a local branch of a big institution). That way, you can instantly verify that a check was issued legitimately. If your customer refuses, it’s a good sign that you’re being conned.
- Don’t Accept More Than What’s Due: More often than not, a scammer pretending to be a buyer or customer will find an excuse to overpay for an item you’re selling or a service you’re offering. It’s always in your best interest to refuse a cashier’s check in an amount exceeding the actual price you’re asking for. Instead, you should ask the buyer to send you a check with the correct amount. Scam artists will usually refuse to do so.
- Understand The Difference Between ‘Clearing’ & ‘Funds Availability’: By law, banks must make funds available from certain types of deposits — such as cashier’s checks — by the next day or within a certain amount of time that a bank can justify as “reasonable.” However, available funds does not automatically guarantee that a check has cleared, meaning the Federal Reserve or other clearing unit has verified the validity of a check and that funds are available to cover it. Some checks unfortunately take longer to clear than others. If possible, wait until your cashier’s check has cleared (posted, not pending, on your bank account) before spending or withdrawing the funds. Otherwise, you’ll be liable for the full amount of the check and resulting bank fees.
- Use PayPal Or A Credit Card: Sometimes, scams work the other way around: you’re a customer buying from a supposed seller. Because cashier’s checks are guaranteed by the banks that issue them, a scammer will find it convenient to accept them to receive immediate payment but never send you the merchandise or provide the service you were seeking. If you’re responding to an ad online (e.g., Craigslist) or an online auction site, opt to pay with PayPal or a with credit card instead. PayPal lends anonymity while credit cards provide $0 blanket liability for unauthorized transactions.
This content is for informational purposes only. Contributing sources include:
- Cashier’s Check Fraud & Scams: How To Spot A Fake, WalletHub.com
- Cashier’s check fraud and scams, Washington State Department of Financial Institutions