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ICBA Warns Consumers: Be Wary of Fraudulent Cashier’s Checks

Washington, D.C. (September 1, 2009)—In light of current economic conditions, the Independent Community Bankers of America (ICBA) is strongly cautioning consumers and businesses to be on the lookout for fraudulent cashier’s checks.

“In the past few years, the FDIC and the Office of the Comptroller of the Currency (OCC) issued a record number of alerts to banks regarding fraudulent or counterfeit cashier’s checks, and the number has continued to grow recently as the national economy has declined,” said R. Michael Menzies, ICBA chairman and president and CEO of Easton Bank and Trust Co., Easton, Md. “Fraudsters are capitalizing on the mass availability of inexpensive color copiers to create doctored copies of genuine or phony cashier’s checks. This technology, combined with selling goods over the Internet, provides fraudsters with a fertile environment.”

Customers can protect themselves by keeping an eye out for a few key warning signs that indicate a cashier’s check might be fraudulent. These include never taking a cashier’s check if it’s:

  • For more than an item’s purchase price. Fraudsters often invent various reasons to explain why they are spending more than the purchase amount;
  • From a party other than the buyer or on behalf of someone else;
  • From “friends” hard on their luck; and,
  • From parties offering a quick, easy way to make extra money. If it sounds too good to be true, it usually is.

Menzies also notes that community banks may place longer holds on deposited cashier’s checks when there is reason to suspect fraud. “This may seem like an inconvenience, but the community bank is really looking out for the best interest of their customer. The customer, not the bank, bears the burden of any losses resulting from deposited checks. If the check were found to be counterfeit, the inconvenience would have been well worth the wait,” Menzies said.

Consumers should take the following precautions to discourage fraudsters:

  • Request a wire transfer rather than a cashier’s check. Provide account transfer information directly to the sending bank;
  • Ask your bank to send the cashier’s check for collection, rather than directly depositing the check into an account;
  • Meet the buyer at the buyer’s bank to obtain payment and transfer property ownership after receiving a cashier’s check directly from the buyer’s bank;
  • Be sure to obtain a cashier's check drawn on a local bank or a bank with a local branch; and
  • Keep a copy of the cashier’s check for quick reference.

To learn more about how consumers can protect themselves from fraud, visit www.icba.org/goto/fraud.