Attorney General Salazar Warns Consumers To Be Wary Of Cashier's Check Fraud Scam

The so-called "Nigerian Letter Scam" has been around for many years. Government agencies, as well as consumer advocacy groups, have repeatedly warned citizens about this scam and its numerous variations. For example, in response to the scam’s jump to the Internet, my office, in February 2001, warned consumers of unsolicited mail, e-mail, and faxes from purported Nigerian businesspeople. The solicitations invited consumers to send in a “fee” to receive millions of dollars as part of an investment program. These scams never pay the promised dollars, and the consumer loses the “fee” that was paid.

We are now receiving information about another variation of this old scam. In recent months there have been reports of counterfeit cashier’s checks. The fake cashier’s checks may appear to be authentic -- including the name of a legitimate United States bank and even containing the magnetic routing codes that appear along the bottom of the check.

This is how the typical cashier’s check scam works. A seller is advertising a valuable item over the Internet. A "buyer,” often from a foreign country, contacts the seller about purchasing the item and states that he plans to use a cashier’s check issued from a bank in the United States. The buyer tells the seller that he either mistakenly sent too large a check, or that he will be sending a check for more than the purchase price. In either event, the seller is instructed to immediately wire the "balance" back to the buyer.

The unsuspecting seller then deposits the cashier’s check in their bank account. Under federal banking law, the customer's bank is required to make those funds available to its customer on the first business day after the funds are deposited. So, the unwary seller is able to withdraw the "overpayment" before the check winds its way back to the bank that supposedly issued it. That can take seven days, or even longer. Of course, after wiring the money back to the buyer, the scam artist is nowhere to be found.

According to the Colorado Bankers Association and the Independent Bankers of Colorado, the consumer -- not the bank -- is responsible for counterfeited funds they deposit into their account. That is because, under Colorado law, a consumer depositing a check into their account makes certain warranties to the bank regarding the authenticity of that check. If the check is ultimately dishonored, the seller becomes obligated to pay the amount due on the check. The bank whose name appears on the counterfeit check has no responsibility to honor it.

In order to avoid becoming a victim of this scam, the Colorado Bankers Association, the Independent Bankers of Colorado, and my office, offer the following tips whenever you are offered a cashier’s check:

• Never accept a cashier’s check for an amount greater than the purchase price.
• Call the bank that issued the cashier’s check when you receive it. Do not rely on the phone number that the buyer gives you. Locate the bank’s number from a reliable source, such as a phone book.
• When calling a bank, verify the following information: the check number, the name of the person to whom the check was issued, and the amount of the check.
• Be sure to wait until you can verify the authenticity of the check prior to giving the buyer the goods. Sometimes these "buyers" wait to give the seller a check on the weekend or when banks are closed, and the check cannot be verified right away

Citizens are warned that fraudulent cashier’s checks are not limited to Nigerian scams, but are used in a variety of transactions. Victims of a cashier’s check scam should contact their local law enforcement agency. Victims of the Nigerian cashier's check scam should also contact their local Secret Service Field Office by phone.