Consequences of Cashier's Check Fraud
A cashier's check should provide the recipient with peace of mind that the person presenting it had to provide the funds to the organization that wrote the check. Unfortunately, there's a good deal of cashier's check fraud, widespread scams that take on many forms...and you may not realize you've been victimized right away. You face legal and financial consequences if you accept a fraudulent check, cash it, and return some of the funds to an unknown party.
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Definition
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Cashier's check fraud involves the use of fake checks to pay for goods or services, often supposedly to cover your taxes for a lottery or sweepstakes win or as part of a secret shopper assignment. The sender often claims to be out of the country, the National Consumers League warns, and uses this as an excuse to buy goods sight unseen when responding to an online ad. You get the check and are instructed to cash it, keep part of the money and wire the rest to a designated person for shipping, taxes or some other alleged purpose. Although your bank may initially accept the check, it eventually turns out to be a forgery.
Banking Consequences
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You're liable for the full amount of the fraudulent check when you cash it or put it in your bank account and withdraw the funds, even though your bank accepted it. For example, if you get a check for $5,000, deposit it and withdraw $3,000 to wire to another person, you must reimburse the bank for the $3,000 when the check gets returned as a fake. You're also liable for the remaining $2,000 if you spent it before the check was returned. The National Consumers League warns that your bank can sue you to recover the money.
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Criminal Consequences
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You face arrest for passing a fake cashier's check, even if you're unaware it's forged. For example, a man named Matthew Shinnick was arrested at a San Francisco Bank of America branch while cashing a check he received from a scammer to pay for mountain bikes, according to SFGate writer David Lazarus. Shinnick was kept in handcuffs in the bank's lobby for 45 minutes and jailed for 12 hours. Charges were eventually dropped, but he has no recourse against the bank, even though the teller told him the check was good, because financial institutions are immune from lawsuits when reporting suspected illegal activity.
Financial Consequences
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Your money is gone forever once you wire it to a scammer through a service like Western Union or Moneygram. Wired funds can be picked up at any office around the world, and recipients are untraceable, Consumer Fraud Reporting warns. You face the inability to pay your own bills or other financial consequences because you must absorb the loss. If someone you don't know wishes to pay you using a cashier's check, be sure to tell them that you'll send them the proffered goods or services only after the check clears.
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