Oct. 3, 2007 at 5:29 PM ET
The cashier's check has long been an Internet criminal's best friend. Consumers seem to think cashier's checks, which come emblazoned with bank logos, are as good as cash. Once a check clears and funds are made available, people think the check must be legit.
But that's not true. It can take weeks for banks to identify fraudulent checks. That means it might be a month or more before they take the money out of your account.
For years, online con artists have exploited this misunderstanding. But the United States Postal Inspector's office is launching a new campaign aimed at clearing things up. On Wednesday, the agency announced the arrest of 77 criminals worldwide involved in bank check frauds, and unveiled a new public education TV campaign and Web site named FakeChecks.org.
With a bit of wry humor, the site exposes six common cashier's check scams: online seductions, overpayments, renter schemes, fake lotteries, work-at-home scams, and foreign business partnerships.
You might think you're too clever to fall for any of these cons, but they still work. The Postal Inspectors also announced the seizure of fake checks worth more than $2 billion from January to August of this year.
The National Consumers League released data on Wednesday showing that most consumers are confused about who picks up the tab for check fraud. Only one-third of those surveyed realized that they are responsible if a check they cash turns out to be fraudulent, said Susan Grant, vice president of the National Consumers League.
'I Chop Your Dollar'
The postal service announcement at the National Press Club, included officials from Nigeria, the Netherlands, the United Kingdom, and Canada, and stressed the international nature of the crime.
International cooperation has helped U.S. authorities put "boots on the ground," in Nigeria, said Greg Campbell of the U.S. Postal Inspection Service. In many fake check scams, criminals are overseas but victims are in the U.S., so it's important to convince international authorities to "protect our (U.S.) citizens and go after their criminals," he said.
Johan van Hartskamp, commissioner of the Amsterdam Police, said his agency recently raided a party at a cafe where a large group of West Africans were celebrating their successful cons against U.S. victims. About 100 illegal immigrants were arrested, and 67 were charged with some form of fake check fraud. At the party was a famous Nigerian comedian, there to perform a sarcastic song titled "I Chop Your Dollar," in which a Nigerian con artist describes how easy it is to scam Americans.
The scams vary wildly, but the basic premise is always the same: A criminal sends a consumer a fake check, which the victim deposits into their bank account. Because bank laws require that funds be made available within a few days, the money appears in the victim's account quickly. And that point, many consumers believe the bank has blessed the check and the money cannot be removed. Then, the con artists ask for some of the money to be returned, usually via an irreversible and untraceable wire transfer. Since the victims think the original check has been validated, they comply.
Cashier's and corporate checks, however, are just as likely to be fraudulent as personal checks. For 30 days or more, the bank that deposits the check can reach back into the consumer's account and take the money -- leaving the consumer with a large debt.
Among the more convincing ruses is an apartment rental scam. A criminal posing as a college student will answer an online advertisement for an apartment by saying they live overseas, and will happily send a security deposit and first month's rent without seeing the apartment. The landlord cashes the fake check. Then, a few weeks later, the prospective renter writes to say that something has gone wrong with the college admissions office and asks for a partial refund of the deposit.
A landlord who tries to be fair and returns the money loses it.
FakeCheck.org includes funny "Candid Camera" style videos of an actor getting members of the public to fall for fake check scams, and videos of real victims sharing their stories.
One thing that isn't on the site: Any mention of changing consumer protection law to make it harder for banks to take back funds they've already deposited into consumers' accounts.
Grant said some banks have begun training tellers to offer more detailed instructions about check-cashing liabilities and that such education efforts have worked. At one bank, fake check fraud plummeted 85 percent after tellers were trained to warn consumers about cashing any check for more than $1,000. Her agency is pushing for new banking laws that would require such notification.
Still, one British law enforcement official, who asked not to be identified, said better banking procedures in the U.K. are one reason British citizens suffer almost no fake check fraud.
"The tellers would look at a check like that and just say, 'I'm not cashing this,' and throw it away," he said.
RED TAPE WRESTLING TIPS
·It's worth visiting Fakechecks.org just to watch the videos, they're that funny. But if you don't, you'll see some of them on local television soon anyway. The ads make the point that people do things online that they'd never do in real life, such as cash a check for a stranger. That's a good question to ask yourself when conducting financial transactions online: Would I do this in person?
·Maybe you are too smart to fall for this, but don't assume your friends and relatives -- particularly older relatives -- are. Don't be shy; ask your parents if they know about check cashing laws and Nigerian scams.
·To review: According to U.S. law, you are responsible for verifying the authenticity of a check. Just because a check clears and the money is put into your account doesn't mean the check is legitimate and the money is yours. The truth is, there's no real way to verify a check is authentic. You can call the issuing bank and ask, and you can even visit the bank in person, but the answer you get might not be accurate. So never cash a check from a stranger if you can avoid it; and if you have to, never spend or refund even part of the money for at least a month, in case the check is fraudulent.