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Cashier's Check Fraud

Cashier's check or "419 advance fee" fraud

Online auction sites are a popular way to buy and sell collectibles, jewelry, even cars; however, Internet auction transactions are not always safe. The cashier's check or "advance fee" fraud has become more prevalent as online auction sites and classified ads have gained popularity. In many cases, large ticket items lure this type of fraud artist to a victim.

The typical fraud scenario is somewhat confusing, which is probably one of the reasons why the fraud artist is successful. This scam involves counterfeit cashier’s checks and money orders, and has been growing in popularity.

How the Scam Works

Victims are generally people who are selling a personal item on the Internet, such as popular online auction sites, or in the classified ads. In this swindle, a "buyer" sends the seller a cashier's check or money order that exceeds the purchase price of the item being sold. The seller doesn't realize that the cashier's check or money order is fraudulent. The seller is instructed to deposit the check and send the remaining funds (that exceed the selling price) back to the buyer in the form of a money order or cashier's check, or even by wire transfer. By the time the seller's financial institution discovers the fraud, the seller (the victim) has already mailed or wired the funds to the "buyer." The victim is now responsible for the full amount of the fraudulent check or money order and the scam artist is nowhere to be found.

Online Auction Safeguards

Online auction fraud registers the largest number of complaints to the FTC's Consumer Sentinel database. You don't have to give up your affection for online auctioning yet. If you safeguard your identity, take your time transferring funds, and keep alert for possible scams, your risk of becoming a victim will be small.

  • Use caution when dealing with foreign buyers and sellers.
  • Beware if the buyer or seller asks you to send money quickly. Banks often take 10 days or more to determine if a cashier's check is counterfeit. Do not ship the goods or spend any of the funds sent to you until 10 days to two weeks after you deposit the cashier's check.
  • Insist on a cashier's check drawn on a local financial institution, or one that has a local branch. Insist on a cashier's check for the exact amount.
  • Check to make sure the financial institution is legitimate.
  • These fraud artists tend to target vulnerable people, senior citizens and young adults. Alert any family members who may be at risk.
  • No legitimate company will offer to pay you by arranging to send you a check and asking you to wire some of the money back. If that's the pitch, it's a scam.
  • Become familiar with any auction site you visit online. Find out what protections the auction site offers buyers and sellers. Don't assume the rules are standard for all auction sites.
  • Find out as much as you can about the other party you're dealing with on an online auction site. Be wary of those who try to lure you away from the Web site with promises of a better deal.
  • Save all transaction information.
  • Protect your privacy. Never provide your Social Security number, driver's license number, credit card number or bank account information.
  • Never agree to travel to meet your buyer or seller.