Financial Frauds: How To Detect A Counterfeit Cashier's Check

Counterfeiting of cashier's checks has increased. Learn how to verify if a check is authentic, and avoid a common scam.

Cashier's checks are purchased at banks. The checks are issued on the bank's own account, rather than on the account of a private person or private business. Because the purchaser has already paid the bank, the bank guarantees payment, the checks cannot bounce, and therefore cashier's checks are considered as good as cash.

However, this is only true if the cashier's check is a real, legitimate check. Lately, there has been an increase in the counterfeiting of cashier's checks, and a counterfeit cashier's check, just like counterfeit cash, is worth nothing. Innocent victims who unknowingly accept counterfeit cashier's checks will be out of luck. If they cash or deposit forged checks, they will have to pay their banks back once the banks discover the checks are phony.

Cashier's checks do not all look alike. Every bank designs its cashier's checks differently, and can use different kinds of check paper and different combinations of security features. Because of these differences, many people do not know what a genuine cashier's check is supposed to look like, which is why cashier's checks have become a target for counterfeiters.

There are, however, a few things you can look for. Make sure that the amount of the check in numbers and in words matches. The account number should be encoded in non-shiny ink. Look for perforations -- checks are generally perforated on at least one side.

But because it is difficult to know what an authentic cashier's check should look like, and because some counterfeiters are producing very sophisticated, convincing forgeries, you should always trust your instincts whenever you are involved in a transaction where someone offers you a cashier's check. If you have any doubts about the transaction -- especially if the buyer is from outside the country, the cashier's check is from out of state, or the buyer sends more than the purchase price -- you should be wary.

If you suspect you may have been offered a counterfeit cashier's check, you should call the bank whose name is shown on the check as the issuing bank. The bank can tell you what kinds of security features, such as watermarks, background patterns, security threads, and special borders, should be present on their checks, and they may also be able to verify, from the check number, issue date, amount, payee, and authorized signer, whether the check is authentic or not.

But when you call the bank, do NOT call the phone number that is printed on the check, because if the check is forged, the phone number may be phony as well, belonging to a criminal confederate of the counterfeiter. Instead, use a public directory to get a phone number for the bank.

You can also get some information online. The website has a page called "alerts and counterfeits" which contains a list of specific counterfeit cashier's checks and money orders that are known to be in circulation. The list can be sorted by chronological order or by alphabetical order according to the name of the bank shown on the counterfeit check.

Each item in the list links to a report from the FDIC, which gives specific information about the particular checks. The information will include such things as the routing numbers printed on the checks, the specific differences, if any, in appearance between the counterfeit and authentic checks, and any available information about the persons who have been trying to pass the phony checks.

A common cashier's check scam to watch out for is the Nigerian cashier's check internet scam. The way this works is that the victim is someone who has advertised items for sale on the internet, often on auction sites like eBay. These are usually expensive items such as cars, motorcycles, and horses.

The scammer, posing as a legitimate buyer, contacts the seller and sends a cashier's check for more than the amount of the purchase, typically several thousand dollars more. The scammers use various stories to explain why they are sending more than the purchase amount, but whatever their stories, they then ask the seller to wire funds for the overpayment to a bank in Nigeria.

The cashier's checks sent by the "buyers" are counterfeit, but they are usually very high quality counterfeits, complete with watermarks, good enough so that when the victim goes to his bank to deposit the check, the bank often accepts it. The bank makes the funds available to the victim within a day, even though it may take several days or weeks for the check to actually clear. Once the victim sees that the funds are in his account, he then wires the "overpayment" to the scammer, as the scammer had requested.

What happens then is that a week or so later, the bank that accepted the cashier's check discovers that it is fake. Unfortunately, the victim of the scam, not the bank, is held liable for the loss, and the bank will go after the victim to repay the bank for the counterfeit check he had deposited. By that time, the victim has already lost the money he had wired to the scammer.

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