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Banks Honor Bogus Checks and Scam Victims Pay
The price for this classic Mustang was $8,000; the overseas buyer sent a check for $14,000 to cover shipping and wanted the difference wired.
(Courtesy Of John Schaefer)
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"There ought to be a law that says banks can't release the money until the check is guaranteed to have cleared -- or the customer is willing to sign a release realizing it is his/her responsibility if the check turns out bad," Mosch said. "Had there been something like that for me when I was a victim, I would have said, 'Oh wait, you mean we're not guaranteed here?' . . . We didn't trust the guy we were selling the car to, but we trusted our bank to tell us the truth. . . . I specifically asked the teller, 'I want to make sure if I do anything with this check it won't come back and bite me,' and the same teller assured me three times there was no problem."
Bank officials say it is not possible to warn each and every consumer about potential scams. "Everybody is in a hurry, so if we made such a disclosure with each transaction about every responsibility the depositor has, we'd be there all day," the ABA's Feddis said.
Besides, Feddis added, the proportion of fraudulent checks is very small, fewer than 100,000 out of the 40 billion checks processed annually. But the numbers are growing. According to the suspicious-activity reports banks file with the federal government, the number of fraudulent and counterfeit checks totaled 88,986 in 2005. That's more than triple the 28,670 reported in 2000. Between 2004 and 2005 alone, the number of reports of fraudulent and counterfeit checks grew by 45 percent.
Driving this increase is the Internet, which has made it easy for scammers to reach an ever-widening circle of susceptible consumers. "Because you're on the Internet in the comfort of your home, you may not realize the dark alleys you're dealing with," said John Hambrick, the FBI's unit chief at the Internet Crime Complaint Center.
Banks say they are trying to be more proactive, alerting their customers to those dark fraud-filled alleys through statement inserts and posters.
"Banks could do a better job," added Grant of the National Fraud Information Center. Among other things, she said, they could improve technology to catch fraudulent checks faster and be more upfront with customers about the risks.
"For example, when a customer says, 'Has this check cleared?' it's an opportunity to say the hold period is over and now you can have access to the money, but that doesn't mean the check or money order is good. If it bounces, you will still be responsible."
Even so, Grant added, consumers need to be vigilant, too. "And there's one sure way consumers can avoid a scam: Anytime anyone asks you to wire them money, that's all you need to know."
Schaefer learned that lesson the expensive way with his Mustang. He eventually sold it "to a gentlemen in Massachusetts," he said, adding, "He paid cash."
