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Cashier's Check Scam

Scam:   Sellers advertising online are defrauded by 'buyers' who pay with cashier checks made out for amounts in excess of the agreed-upon purchase price and ask the balances be sent to third parties.

Example:   [Collected via e-mail, 2003]

My husband is currently selling his motorcycle online. Last week when he posted his bike he recieved an email from a hotmail account stating he was interested in buying his bike and he is located in West Africa. He mentioned that he knows someone in the US that owes him money and would like to get our address to meet and make the exchange and that he would pay for all shipping charges. Well, a friend of ours, his cousin is also selling his bike. And he got the same email, but from a different email and name. That sounds funny to me. Well, my husband re-posted his bike yesterday online and he received from another person just about the same email about him residing in West Africa.
 

Origins:   An interesting and highly lucrative con targeting those attempting to sell vehicles online debuted in the summer of 2002. Like the highly successful Nigerian scam, this new bit of larceny also features businessmen from Africa intent upon closing odd-sounding deals. Only in this case, it is not the pigeons' greed that traps them, it's their honesty.

The scam works like this:
  1. Person looking to sell a used car or motorcycle advertises the vehicle on the Internet.
  2. The unsuspecting seller is contacted in e-mail by a prospective buyer who hails from somewhere in Africa, usually Nigeria. This buyer agrees to the asked-for price without haggling and looks for immediate assurance the vehicle will not be sold to anyone but him. He offers to have someone pick up and ship the vehicle to Africa once the sale is complete, making it clear he alone will bear all charges associated with that aspect of the sale.
  3. Mention is now made of the method of payment: a cashier's check for more than the agreed-upon price for the vehicle. This check is to come from the buyer in Africa, with the residue to be sent to a third party in the USA the buyer says he owes money to. The seller is asked to cash the check, keep the right amount for the sale of his car or bike, and send what's left to this third party. (Alternatively, the check is said to be coming from the third party, with the residue after the vehicle is paid for to be sent back to the buyer.)
  4. Example 1: Dr. Dipo Morgans of Nigeria wants to buy your used car for $5,000. His friend, Mr. Okuta, will be sending you a cashier's check for $8,000. You are to keep $5,000 for the car and send the remaining $3,000 to Dr. Morgans.

    Example 2: Dr. Dipo Morgans of Nigeria wants to buy your used car for $5,000. He will be sending you a cashier's check for $8,000 on the understanding that you will forward $3,000 of it to the shipping company that will be transporting your car to Africa.

  5. The cashier check for the larger-than-necessary amount arrives and is duly deposited in the seller's bank account.
  6. Three days later, the check appears to clear, and any freeze the bank had placed on these funds is removed.
  7. Satisfied that the check was good (the bank had released the funds, after all), the seller wires the overage to the person it's owed to and waits for someone to come pick up the vehicle.
  8. No one ever comes to pick up the vehicle.
  9. Two weeks later, the seller is informed by his bank the check was a forgery.
  10. The seller is now out the amount he wired to someone else.
In some versions of the scam, the buyer is not an individual but rather an agent for a firm that purchases cars on behalf of others, often diplomats stationed in foreign lands. This car broker is usually located in Africa.

The "reason" for the inflated-value check will vary from one attempt to defraud to another. Currency exchange problems will be cited. Or a horrified buyer will realize he's had the check prepared for far too large an amount. Or the check is being sent by a third party for the full amount this other person supposedly owes the buyer. Or it's a refund check for a
failed sale for something that would have cost more. Or it would take 30 days to clear a check from Africa, hence the need to have an American third party send the payment. The reasons are many. And varied. And false.

Cars or motorcycles aren't the only items to attract this form of scam — those attempting to sell horses have experienced it too. It's not unreasonable to extrapolate those attempting to sell boats will be similarly targeted. What matters is not the nature of the item being offered for sale but its price — it has to be high enough to justify the seller's feeling comfortable in sending thousands of his own dollars to a stranger under the mistaken belief he's already holding an even greater sum in his hand.

In another form of the scam, those advertising online for roommates are contacted by prospective apartment-sharers who want to send cashier checks to cover the first few months rent plus a few thousand extra and who require the extra be mailed back to them. Though nothing is being offered for sale, it's the same scheme — the check will turn out to be worthless, but usually only long after the roommate-hunter has mailed his own very good check to the con artist.

The scam works because the Federal Deposit Insurance Corp. (FDIC) requires banks to make money from cashier's, certified, or teller's checks available in one to five days. Consequently, funds from checks that might not be good are often released into payees' accounts long before the checks have been honored by their issuing banks. High quality forgeries can be bounced back and forth between banks for weeks before anyone catches on to their being worthless, by which time victims have long since wired the "overpayments" to the con artists who have just taken them for a ride.

Although this scam is in its infancy, real people have already been bilked out of thousands of dollars by it — in some cases tens of thousands. The con has claimed victims in communities across the USA, so don't let your not having heard about it before lull you into a false sense of security. That the game is new doesn't mean it's not dangerous.

Barbara "cheque and cheque again" Mikkelson

How to Avoid Falling Victim to Cashier's Check Scams:
  • No matter how sweet the deal, don't get involved in any sale where the buyer wants you to accept a check for an inflated amount and refund the overage.
  • If you accept a cashier's check as payment for something you have sold or rented, make sure it has cleared the issuing bank before you refund any money or surrender possession of the vended item. It may take two to three weeks for the banking system to determine the check is counterfeit, so even if the funds look like they're available (and even if your bank tells you they are), hold onto whatever it was you sold and the funds you received for it for three weeks.
  • If you have been bilked, call the U.S. Secret Service at (202) 406-5572 or write to U.S. Secret Service, Financial Crimes Division, 950 H St. N.W., Washington, DC 20223. Also, call your state attorney general's consumer protection division.
Additional information:

    FBI on cashier check scam   Intelligence Note
  (Internet Fraud Complaint Center of the FBI)

    Scam Victims United on cashier check scam   Counterfeit Cashier's Check
  (Scam Victims United)

Last updated:   2 March 2012

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Sources:

    Espinoza, Richard and Dan Morgolies.   "Latest Net Scam Preys on Honest Folks."
    Charleston Gazette.   1 June 2003   (p. D7).

    Flaum, David.   "Scam Hits Sellers Over Net."
    The [Memphis] Commercial Appeal.   2 March 2003   (p. G1).

    Jones, Matthew.   "Beach Police Officers Warn of Fake-Check Web Scam."
    The Virginian-Pilot.   9 January 2003   (p. B4).

    Kades, Deborah.   "Wisconsin Residents Fall Prey to Used Vehicle, Lottery Scams."
    The Wisconsin State Journal.   12 December 2002.

    Kristof, Kathy M.   "Nigerian Money Con Targets Small Firms."
    Los Angeles Times.   7 September 2003  ; (p. C3).

    Associated Press.   "Missoula Credit Union Members Taken."
    15 March 2003.