Trying to sell his 1968 Mustang online, John Schaefer received what appeared to be a firm offer from an overseas classic-car dealer. The buyer sent Schaefer a check for $14,000 even though Schaefer was asking only $8,000. The buyer said the extra money was to cover shipping and directed Schaefer to wire him the difference.
“It seemed kind of funny, and I had some hesitation,” said Schaefer, who deposited the check in his bank’s ATM over the weekend.
Last Monday, he asked a teller to see if the check was good. She left her perch, went to the backroom and returned assuring him “there was no problem,” Schaefer recalled.
That Wednesday, “still not feeling quite right,” Schaefer asked the same teller to make sure the check was good. That time, the teller told him the check had been cleared and he was “all set.” Schaefer withdrew $5,000 and wired the money to the buyer.
Four days later, as he reviewed his account online, he discovered the check was not good. Even worse, the bank was demanding that he repay the $5,000.
“Had I made the deposit and not tried to make sure it was legitimate, I should have full obligation to make good on it,” said Schaefer, 34, a facilities manager in Brattleboro, Vt. “But I checked with the bank twice, and now I find out they have no accountability.”
Schaefer is one of thousands of consumers who have been victimized by an increasingly common check scam that relies on the vagaries of the banking system to take advantage of unsuspecting consumers.
Federal rules require banks to release funds from a consumer’s deposit quickly, usually within one to five business days, depending on the kind of check. However, it can take weeks before a bank discovers a check is fraudulent.
So when a teller says “the check has cleared,” the teller is “usually thinking in terms of bank rules, that the hold time is over, and the consumer now has access to the funds,” said Susan Grant, director of the National Fraud Information Center. But the average consumer thinks that phrase means “the check is not fraudulent.”
When that happens, it is depositors who are responsible for the money, she said. As the American Bankers Association explains in a “Fraud Alert!” statement insert it distributes to banks to send to customers: The consumer is “in the best position to determine how risky the transaction is.”
To facilitate the flow of funds behind the 40 billion checks processed each year, banks are required to release funds within a few days, said Nessa Feddis, senior federal counsel for American Bankers Association.
If tellers start asking a lot of questions or start holding checks until they are determined to be good, banks “might be perceived as trying to circumvent the rules entitling people to withdraw funds,” Feddis added.
That provides no comfort to those caught in scams.
Telltale methods of check scammers
Stop and ask yourself a few questions before you cash that check.
Is the check for an item you sold on the Internet, such as a car, boat or jewelry? Is it for more than the item’s selling price?
Is the check drawn on a business or individual account showing a different name than the buyer’s?
Are you receiving a commission for facilitating money transfers through your account?
Have you been asked to pay to receive a deposit from another country such as Canada, England or Nigeria?
And most important, have you been instructed to wire, send or ship money as soon as possible to another major city or a country such as Canada, England or Nigeria?
If you answer yes to any of these questions, the FBI says you may be a scam target. If you think someone is trying to pull a scam, don’t deposit the check. Contact the National Fraud Information Center at www.fraud.org or call 800-876-7060.
By The Washington Post
