Counterfeit Cashier's Check Scam Hits Epidemic Proportions in U.S

After hearing Sandy Roney's story, you don't know whether to hug her or offer her a thousand dollars.

Roney is just one of thousands of innocent victims who has been financially devastated by an insidious counterfeit cashier's check scam that has increased dramatically over the past few years.

"It's an epidemic," says Donald Buchart, president of Walworth State Bank located in Walworth, Wisconsin. "We enclose warning literature regarding counterfeit cashier's checks in our bank statements," says Buchart, who states that the counterfeit cashier's check scam has flourished, particularly over the past year, "but many people don't read their statements anymore due to online and telephone banking services."

The most sinister part of the counterfeit cashier's check scam is that it relies on people's longstanding trust in the once "same-as-cash" cashier's check in order to work. The counterfeit cashier's check scam follows a typical scenario: A seller of a product or service, often someone doing business over the Internet, is contacted by a potential "buyer." The "buyer" agrees to purchase the item, or service, and sometimes claims to be representing a third party. The "buyer" then sends what appears to be a legitimate cashier's check for far more than the actual amount of the item he purchased. He then contacts the seller and asks the seller to please send back the inadvertent "overpayment" or to send it to a third party. The "overpayment" usually amounts to thousands of dollars. The victim deposits what appears to be a legitimate cashier's check into his bank account, withdraws cash, and then wires the cash back to the "buyer," or a fictitious third party, before anyone is the wiser that the check is counterfeit. Unbeknownst to the victim, he has sent the criminal his or her own money, because within days the bank will discover that the check was no good. Because it can take anywhere from several days to a month for a cashier's check to clear, the crook is long gone by the time it is discovered that the cashier's check is a phoney. The victim is then held responsible by the bank to make good on the check. Unfortunately for many of the victims the money they sent to the scammer is all the money they had.

Roney, a wedding photographer and business owner who resides in Lake Geneva, lost over $4,000 in the flourishing cashier's check scam, in addition to a mounting debt of overdraft fees charged to her by her bank.

"I cried for two days straight," Roney said after learning that the $7,400 cashier's check she received from what she believed was a wedding photography client was discovered to be counterfeit. Just like other victims, the cashier's check Roney received was for far more than her photography fee - by $42000.00. After sending Roney the fake cashier's check via FedEx, the phony client e-mailed Roney and said that his secretary had inadvertently mailed her the travel agent's fee and asked her to take out her own fee and wire the remainder, in cash, to a travel agency in Nigeria where his fiancee was supposedly waiting to catch a plane to Lake Geneva to get married the next day. Like most other honest, fair minded individuals, Roney complied. Although, Roney admits, because the "client" claimed to be from the UK, she had some reservations about immediately using the funds from the check and expressed her concerns to the teller.

"I even showed him the e-mail from the guy (who signed his e-mails to Roney as Terry DeSalvatore),"Roney said, referring to the e-mail that the scam artist sent her requesting her to wire the $4,200 to Nigeria. "Because the client was from the UK I asked the teller, 'Should we hold this for 7-10 days to make sure this is good?' He left the window for about five minutes and came back and said that the check was fine." The teller then went into the vault and got $4,200, in cash and handed it to Roney. "I even called the bank the next day to make sure the remainder of the funds were available and they said yes."

Although the counterfeit check scam has been growing exponentially for the past several years, the banking industry's precaution measures to protect their customers comes into question. That Roney and others like her continue to be victimized by the scam at their banking institutions, in light if its epidemic proportions, is shocking at best.

A spokesman for Associated Bank defends the banking industry's apparent impotence at protecting its customers.

"We do try to assist our customers in items that may be questionable," states spokesperson Jon Drayna, but says that it would be virtually impossible for a bank to try to verify each cashier's check that is presented to the bank. Drayna points to Federal laws that require banks to release funds within one to five business days depending on the type of check. And he further points out that there is an important distinction between a check clearing and the funds being available. The funds might be available as mandated by federal law, but the check may take weeks to "clear," i.e. be deemed good.

A week after Roney deposited the check and sent the cash to Nigeria, she received a phone call from the manager of her bank telling her that the cashier's check she deposited was counterfeit. In the meantime the crook canceled the fictitious wedding and requested Roney to send him a refund of her photography fee also which was $3,000. But by that time Roney had become suspicious and did not send any more money. Not only was Roney out the 4,200 she wired to the criminal, but also the $3000 fee she counted on getting for a wedding photography job that never materialized.

But that was only the beginning of Roney's financial nightmare.

"At first [the bank] told me not to worry, that my checks would be covered because this didn't appear to my fault." Then the overdraft notices for checks Roney had written started pouring in, along with an overdraft fee of $29.00 per check, including a $29.00 fee for the counterfeit check itself, and 5.00 per day that the account was in a negative balance. "It never ends," she says. In addition the bank froze her accounts. Roney suddenly found herself with no money for groceries or any way to buy film for her upcoming photography shoots.

"It was all the money I had," she said of the $4,200 of her own money that she wired to the counterfeiter. "Everything I had to my name went to the [phony] travel agency."

Including the multiplying bank fees, when all is said and done Roney estimates that the scam will have cost her approximately $10,000. "I'm in the hole big time," Roney admits.

The day Roney received the call from her bank telling her that her cashier's check was counterfeit, she immediately went to the police department to file a written report and was told that they would call her to let her know how the investigation was going. To date, she has not heard back from the police department. Because many of these scams originate from outside the U.S. there is little that can be done to find the criminals and bring them to justice.

Understandably, many banking customers who have been the victim of the counterfeit check scam feel that their banks should have done more to protect them, and most feel that the bank should absorb some if not all of the loss in incurred by phoney counterfeit checks. A couple who was also victimized by the counterfeit cashier's check scam started a website to help victims which can be accessed at www.scamvictimsunited.com. During the first month that the website was created it received over 12,000 hits.

Improvements in high-tech printing devices and software programs has made it possible for crooks to print cashier's checks that are virtually undetectable to the untrained eye. Scammers will purchase a cashiers check from a bank and copy the bank's issuing number from the check so that it looks identical to the real thing. The only foolproof way to know if a cashier's check is legitimate is to call the bank that is named on the check as the issuing bank and ask if indeed the check was issued by them. Due to time constraints, most bank employees do not take the time to call the issuing bank. Consumers would be wise to call the issuing bank themselves before accepting a cashier's check.

It's a small inconvenience that might save you from a very expensive nightmare.