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Beware Envelopes Bearing Cashier's Checks

Don't go by the "legitimate look"

     
11:41 pm on Apr 27, 2004 (gmt 0)

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We're an online company but we do about 3% of our business from faxed or mailed orders. After some fax inquiries (request for quote kinds of things), we received a cashier's check and a copy of one one of our faxed quotes. These came to us via Next Day Air delivery.

The check was for hundreds of dollars and a note requested we ship UPS Second Day Air. We promptly got the package ready for shipping, then my latent suspicious-streak awoke (I'm am ex-cop).

The check looks really, really good. Multi-color watermarks, lots of security features, and even a toll-free "call for verification" telephone number.

But it is bogus.

The routing number doesn't match up to any real institution, and the bank name is fictitious.

It looks so authentic. It almost certainly is legitimate high-security check stock.

We were fortunate that we held back shipping the product, so we're not out anything but time. Many companies and individuals won't be so lucky. One current scam is to use fake cashier's checks to buy used cars from individuals. Your bank gladly accepts it; it won't be for days or even weeks until it has been through the system and rejected, and the poor individual is out thousands of dollars.

5:47 am on Apr 28, 2004 (gmt 0)

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Yes this is an unfortunate scam. You are lucky they did not send you even more money & ask them to wire the extra money to a friend of theirs in the US. That is the "normal" scam.

-Corey

6:15 am on Apr 28, 2004 (gmt 0)

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I always held checks for 10 days. You can deposit a check and you bank give you credit for it but it can still bounce.
4:54 pm on Apr 28, 2004 (gmt 0)

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always held checks for 10 days

That's part of the scam...they send you a (supposedly) "unquestionably good check" with a request to expedite processing and shipment. By the time the 5-10 days go by you've long since sent the merchandise.

In our four year history, only about 6 out of thousands of orders have requested expedited shipping outside of the Dec. 15-23 window. Of those 6, half were fraudulent.

Part of the ongoing problem is that (speaking only of the U.S.) there isn't enough available enforcement. In my case, there is plenty of information and a better-than-average opportunity for apprehension, but it is nearly impossible to get any agency interested in investigating. Therefore, even though I was fortunate, the turds will go on to victimize others.

5:12 pm on Apr 28, 2004 (gmt 0)

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4:04 pm on Apr 30, 2004 (gmt 0)

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We tracked a fraudulent purcasher to his home in Malaysia and although I provided the banks, the Australian police and the Malaysian police his details nothing was done.

As I had his home number and mobile all I could do was ring him at inconvenient times just to irritate him.

Not much of a deterrent really.

Until the banks start following these up instead of making the merchant pay then nothing will really be done.

Cheers,
Cam

4:16 pm on Apr 30, 2004 (gmt 0)

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Does anyone know of any resources available to look up routing numbers and match to the bank name on the check to see if they are legitimate?
5:02 pm on Apr 30, 2004 (gmt 0)

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Numbers may tally and the local bank may be able to confirm it looks like a genuine document/passes the ultra-violet tests but it could be from a stolen banker's cheque cheque book and if it is you'll lose your money.

It's ridiculous that banks can return cheques after several weeks saying that it's bounced. They have their asses covered all ways. Apparently it's not the case that your cheque has cleared in 5 days. It's just that they allow you to draw the money in 5 days. If the issuing bank returns the cheque as unpaid they may even do it by second class post and it could be several weeks before your bank gets back to say that the cheque has bounced. 10 days/30 days/500 googul days are not enough. Barclays bank here won't even give you an outside limit i.e. they won't say "if the cheque is not returned within x days then it definitely has cleared".

And there's nothing you can do about it except harrass your bank. On every cheque you deposit keep phoning them and insisting they phone the issuing bank to confirm that it has been paid. This is something that they can do and it is something we insist they do on every transaction. When they do confirm a particular cheque has cleared get the name of the person you spoke to and record the date/time. Then ship the goods.

5:37 pm on Apr 30, 2004 (gmt 0)

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We once got burned with a fraudulent cashiers check.
We lost $13,000.
The bank had cleared the check and reversed it a few days later.
Lucky for us the guy was caught and we got our ring back.
But, be very careful.

Michael

2:02 am on May 1, 2004 (gmt 0)

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Does anyone know of any resources available to look up routing numbers and match to the bank name on the check to see if they are legitimate

Search for "fedwiredirectory" in your SE of choice and you should find one (US, at least).

2:52 am on May 1, 2004 (gmt 0)

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My husband was a financial institutions regulator for the State of Nevada for 30+ years, and this is his advice on this situation:

The ONLY safe way to accept international orders for either ephemeral or durable goods is by secure credit card transaction. And even then you may be open to identity-theft fraud (though that's a vanishingly small possibility/percentage at least in the US - contrary to what some of the big card companies would like you to believe mostly as a marketing ploy....) The single mitigating factor here is the fact that you get instant verification of the charge to the card presented. Yes, upon occasion you WILL get a charge-back. But the odds are way better with card transactions than with cash, check, or money order.

You would NOT BELIEVE the horror stories my husband can tell about counterfeit cash, f'rinstance - leaving out of it money orders, cashiers' checks, etc. You don't want to go there....

And of course, you do take a hit on card transactions because of the processing percentage/fee you either have to absorb or pass on to your customers. However, that's far less of a liability than a huge order for which you accepted a bogus payment, right?

3:26 am on May 1, 2004 (gmt 0)

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How safe are wire transfers? My company keeps a low-balance bank account open soley to accept wire transfers (sorry this question is a bit off topic).
7:29 am on May 1, 2004 (gmt 0)

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This threads a real eye opener - I tend to take cheques on trust - I think ill go back to barter.

Yeah mate its gonna cost you quarter of a cart horse and a water pump for that clock......

10:01 am on May 1, 2004 (gmt 0)

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We only accept certified cheques, wire transfers or pre-authorized credit card transactions.

Only had one case of a fraudulent credit card charge and he's currntly in jail!

I have a little explanation I send to people who try to bypass the system and "expedite" charges.

"It is a sad commentary in today's world that we are forced to take precationary measures to protect our financial security. Although we would like to accommodate your request, I'm afraid we are unable to expedite payments. I'm sure you can understand the need and appreciate your patience. We appologise for any minor delays this may cause."

I've never lost a sale over it. People really do understand and those who don't ... well they may be the reason we take these measures.

10:38 am on May 1, 2004 (gmt 0)

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The ONLY safe way to accept international orders for either ephemeral or durable goods is by secure credit card transaction. And even then you may be open to identity-theft fraud (though that's a vanishingly small possibility/percentage at least in the US - contrary to what some of the big card companies would like you to believe mostly as a marketing ploy....)

If the chances of being stung by CC fraud are diminishing why would the big card companies want to give a message contrary to that fact? I'd have thought they'd use the fact of diminishing risk to promote their cards?! If in fact there is diminishing risk.

I beg to differ. Cards and not the safest way of trading. That's still cash. The second safest is wire transfer (to answer volatilegx's question) which you can always confirm are cleared funds. The only proviso with wiretransfers is that we insist customers use our reference number on the transfer so we can match the payment to the order.... particularly useful if you take many orders that have exactly the same value. In terms of risks cheques still beat creditcards any day as once a cheque is paid there is no possibility of a chargeback. Also, with cheques customers are less likely to try funny tricks. The exploitative ones can't use the threat of "I'll call my bank and cancel my transaction" to extract some freebie from you because the parcel arrived one day late or the packing was the wrong colour. Just confirm that cheques have cleared before you ship the goods. Credit cards can't beat that for safety.

Sorry, vkaryl, from a merchant's point of view CCs are not the safest. If you do the right things you'll never take a hit on a cheque payment. You have no such guarantee with a CC.

7:03 pm on May 1, 2004 (gmt 0)

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Macro:

Things of this nature differ by location. I would assume you're in a Commonwealth or EU nation rather than the US. For you perhaps, and for those in your country, this may be true.

Around here (southwest US - this sort of thing I think varies by area in the States), the probability of bounced checks is so much higher than fraudulent cc transactions that you'd be appalled. Around here, most merchants of any size (and many that you might consider too tiny to bother) use a "card swiper" on every register. The card is immediately accepted - or not. If not, then an obvious replacement is cash, because around here, check guarantee cards aren't very viable any more, and a LOT of merchants (including two local "very big guys") don't take paper checks any more - though they will take a debit card which of course is an immediate deduction from the account, and an immediate credit to the store.

I worked for a plumber/home construction company for two years, through mid-2002. In those two years, we had about 150 bounced checks - and NO cc chargebacks (the number of transactions for both was about even - and included one man who used his amex to buy a $200,000 house.... nope - that's not a joke....)

One probably uses the exchange method that one finds easiest after taking into account relative security and past experience. There's always a risk, even with cash in a local transaction: it's not unheard of for merchants to have to "eat" a counterfeit bill - even with our fancy new multi-colors. We had some counterfeit new-version twenties here at Christmas.

7:30 pm on May 1, 2004 (gmt 0)

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No insult intended, but anyone who would say that accepting a credit card is "safer" than accepting a check has been out of the banking business too long.

In fact, the opposite is true. When you receive a check, you have all of the power. You don't have to ship anything right away and you can ask your bank to verify the check: they will call the bank it is drawn from first (NOT the phone number on the check, since that could be faked, but the remote bank's real number) to make sure it's legit. The other bank, when asked by your bank, will even call their customer and make sure the check was sent intentionally. Authenticity can be determined in one to three days, all you have to do is ask - banks are HAPPY to take extra steps to verify if a check is legit or not.

All you have to do is let your customer know that their shipping preference will go in effect AFTER the authenticity of the check is verified. This should be stated in your standard policy.

When you accept a credit card, on the other hand, it is MUCH more risky. First, just because authorization was accepted doesn't mean the charges will be rejected by the card holder BEFORE THE MONEY EVER HITS YOUR ACCOUNT - any card holder can do this with a phone call to their credit card company, it takes about 15 minutes. Second, it is EXTREMELY easy to charge-back a purchase and banks are happy to do it. I've had more than one situation where I had a SIGNED RECEIPT and the FedEx delivery acceptance signature (which matched my receipt) and STILL lost a charge-back dispute. Banks are more eager to help their customer than the merchant because they PROFIT FROM FRAUD committed by their card holders. You know those charge-back fees, which range from $15 - $25 depending on your merchant account provider? Well $15 of that goes to the CARD HOLDER's BANK, and the rest (if any) goes to your merchant bank.

Do the math ... say your credit card is 10% interest and you buy something for $100.00. If you DIDN'T PAY YOUR BILL it would take the bank an ENTIRE YEAR to make $10.00 off of you by Interest. If paid it off when you got the bill, or even just made the minimum payment every month, the credit card company made even LESS than $10.00 off of you for that purchase.

But if you throw fraud into the mix ... your credit card company TAKES their money back from the seller plus an additional $15.00 to their merchant bank. So the credit card company got all of their money back and just made $15.00 RIGHT NOW, and they didn't even have to loan out the $100.00 to get it.

THAT is why banks always side with their card holders and not with the merchant, and that is why EVERYTHING is much safer than credit cards. With a credit card, you may "think" you have the money but the card holder could still take it away for up to SIX MONTHS after the purchase. When you take a check or any other form of payment, you hold all of the cards - verify it first and don't ship until you do.

7:40 pm on May 1, 2004 (gmt 0)

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Also wanted to add one thing about wire transfers - many banks have a second routing number which is available for the purpose of accepting wire transfers, but money cannot be SENT using this routing number.

I used to receive wire transfers all the time for another company and it was nice to know that I could freely give out wire information that I knew no one could ever TAKE money from because the routing number wouldn't work for outbound transfers.

There are a few other secure ways to receive money. One of them is NETeller, which is kinda like PayPal but they have a 100% no charge-back guarantee. If someone funds their NETeller account with a credit card, pays you, then charges back the credit card NETeller eats it. Another option is PrePaid ATM, same type of thing. If any of you play online Poker, you are no doubt familiar with these types of cashiers.

And last but not least is my favorite, good old Western Union. With WU being in every country and easily accessible to just about everyone, they can go into any Western Union and pay, and in about 5 - 15 minutes you can go into any Western Union and pick it up. No reversals, no charge-backs, no undo.

10:07 pm on May 1, 2004 (gmt 0)

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With wire transfers in the US there is a 2 day delay for *complete* verification through the Federal Reserve Bank.

Many banks will take on this risk themselves, making the wired funds available to you within 24 hours, so you may not know about the extra time to clear FSB. They call the bank to verify authenticity, and then it "clears" for you by next day, and you think you are in the clear.

If it was a fraud, and it doesn't clear the FSB, you will see it promptly removed from your account.

Like money orders, they ain't valid just cause they were depositied and "cleared". They can be returned for a surpisingly long period of time afterwards (I believe that once the FSB says it's ok, however, any fraud is covered by insurance)

11:09 pm on May 1, 2004 (gmt 0)

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Counterfeit money in the U.S. is extremely rare. In 30 years my company has only suffered one small loss and those bills were pretty amateurish. It is far, far easier and less risky for a crook to write a bad check, which is often just a misdemeanor.

Pass a counterfeit $20 and all hell will break loose. Secret Service and TV news crews in some cases.