How To Spot Cashier's Check Fraud

Cashier's checks are issued by banks and sold to their own customer or any other purchaser and represent a direct commitment of the Bank. They were earlier seen as safe instruments and used quite regularly for payments for goods and services.

These checks came into the spotlight sometime back for the wrong reasons. They became a very lucrative instrument for duping people.  The value of a cashier's check is available to the customer a short time post deposit. However, if the check is found to be fraudulent, then this money is not the customer's and has to be returned. The problem is that it takes some time to uncover a fraudulent cashier's check.

How do you ensure that you are not taken in by a fraudulent cashier's check? Here are some tips that will work.

  1. Understand what a cashier's check is and what is meant by ‘funds available' post deposit of a cashier's check.
  2. Have business dealings only with people whom you know. Get references from independent third party as far as possible. Be extremely wary of accepting cashier's checks from people whose identity you do not know.
  3. Accepting payments for sales through the Internet has to be ideally through escrow services or online payments systems. Avoid cashier's check.
  4. Even if accepting payments through cashier's checks, always take a check for the exact amount of the value sold and NEVER an amount inclusive of a value to be paid to a third party.
  5. Ideally a payment through a cashier's check should be on a Bank with presence in your area also.
  6. Call the Bank that has issued the cashier's check to verify its genuineness. They will be able to confirm it as genuine if they have issued it.
  7. Always distrust a cashier's check transaction which involves:
    • A payment into another account or person by wire transfer.
    • Any immediate and urgent action by you urged on by the other party.
    • Proceeds seem too much gain for ‘little or no pain'.
    • A gift or prize money requiring payment.
    • A buyer from another country and finds calling you directly difficult.
  8. Avoid any transaction which has a request, on email, requesting you to keep it a secret.
  9. Inspect the check for genuineness through security elements like watermarks, heat sensitive ink etc.
  10. In case payment is received through a cashier's check, cash it at the Bank in their presence.
  11. Accept a cashier's check only during business hours from people you know.
  12. When accepting cashier's checks from those you don't know, ensure that identity information is also taken from such individuals.
  13. Some typical cashier's check scam scenarios are 
    • Sales of good over the Internet.
    • Sales of goods over the Internet but the payment is over and above the agreed sales price and is accompanied by a request for wire transfer of the excess amount to a third person.
    • Sudden windfall from a lottery you've not participated in or being the beneficiary of an unknown person. You will be asked to wire the processing fee or some such relating to this receipt, to a person in another county.
    • Being chosen as a mystery shopper and receipt of the money by cashier's check. There is also a request to transfer part of the money to a third party.

Being aware of these scams is by itself a protection against them. So next time you or anybody you know becomes aware of such a scam happening, you can protect somebody from being duped.


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