MOUNT VERNON — So you think you’ve won the lottery. All you have to do is deposit a cashier’s check into your account, send a portion of the check back to the group that sent it to you, and you’re rich.
Not so fast.
This is a common form of cashier’s check fraud, a phenomenon that has spread in recent years and occupies the minds of bank employees across the nation. Although they were once thought to be virtually as good as cash, financial institutions must be more on their guard and can no longer take a cashier’s check at face value. Customers with cashier’s checks may have to wait a few days before accessing the cash.
Gordon Yance, president of First-Knox National Bank, said that nowadays employees are trained to detect this type of fraud. Although the majority of cashier’s checks are still good, he said, cashier’s check fraud has grown to the point that it is now a major concern and focus of the bank.
“Scammers know that normally we wouldn’t question [cashier’s checks],” Yance said. “But the window of opportunity [for such scams] has closed as we have become more attuned to the risks of accepting them.”
First-Knox receives fraud alerts from the Financial Crimes Enforcement Network, a branch of the U.S. Department of the Treasury that helps fight financial crimes. The bank also receives fraud notices from the Office of the Comptroller of the Currency, another branch of the U.S. Department of the Treasury.
Yance said the bank takes notice of financial institutions mentioned in the alerts, although oftentimes the financial institution is not at fault, since scammers are skilled at forging cashier’s checks. He added that checks received from the Internet, such as the payment for an item sold on e-Bay, ought to be treated with caution.
Alicia Freeman, spokeswoman for Peoples Bank, said accessing the money from a cashier’s check might not be as automatic as some people think. About five years ago, Peoples Bank began to scrutinize some cashier’s checks, as well as money orders, as the instances of fraud increased and became more well known. She added that the bank also receives financial fraud notices from the government and keeps a database of this information that can be readily accessed by staff when needed.
“We try to examine each case individually,” Freeman said. “But we try to be fair and keep the process uniform.”
She said customers with a new account, for instance, are more likely to have a cashier’s check questioned than those who have been bank customers for a long time.
Yance said bank employees generally have to make a judgement call when it comes to examining cashier’s checks. He said not every cashier’s check is questioned. Knowing the customer comes into play. An out-of-state cashier’s check is more likely to raise a red flag than one issued by a local institution, and a cashier’s check from a foreign bank will be scruitizned.
“We offer to deposit the cashier’s check and encourage customers to wait before using the money until the check clears,” he said.
Yance said bank employees may ask additional questions of someone depositing a cashier’s check if the situation is unusual. For example, if a person who regularly deposits $500 suddenly seeks to deposit a $6,000 cashier’s check. He said some financial institutions will verify the legitimacy of a cashier’s check. Other institutions will not, and, in that case, the bank will put a temporary hold on the check until it clears.
Freeman said customers with cashier’s checks generally understand the checks are not automatically treated as cash like they used to be.
Yance said some customers get a little anxious about having a cashier’s check questioned or having a hold placed on the check, but such measures are taken for the benefit of the customer as well as the bank.
Ultimately, the customer will be held responsible. If someone deposits a $5,000 cashier’s check and spends the money, and the check turns out to be bad, the customer will have to repay the money and banks will go after that money.
Freeman said this type of fraud has affected Peoples Bank customers.
“One situation involves a customer who is on a limited income has to pay back a couple thousand dollars,” she said. “That’s very debilitating.”
Freeman said the bank takes cashier’s check money order fraud very seriously.
“We are a smaller institution. Any losses that we incur come off our bottom line. It will make a big impact, so we examine these cases closely,” she said.
Yance said First-Knox has also had instances where a customer has been defrauded and had to repay the bank. In these cases, he said, the bank tries to be understanding and will offer payment plans to these individuals. He added that when a cashier’s check is found to be fraudulant, the customer is contacted first, and, then, if necessary, law enforcement, although it is difficult for local law enforcement agencies to take on checks that have come from another state or country.
“I think customers are getting smarter,” he said. “We try to provide them with educational materials.”
Yance said the best way to combat fraud of this kind is to educate bank employees and the public, adding that education will not eliminate the problem but will help reduce the problem.
More information on cashier’s check fraud and other common financial crimes is available at the consumer protection sections of a variety of Web sites, including the Federal Trade Commission, ftc.gov; the Federal Deposit Insurance Corporation, fdic.gov; the Financial Crimes Enforcement Network, fincen.gov; and the Office of the Comptroller of the Currency, occ.treas.gov.
