We had a customer deposit a counterfeit cashier check. We did not place a hold on the funds. The customer wired $20,000 out of the country. This check wound up being a part of a middle eastern scam ring. He was selling a card the buyer gave him a check for $30,000 more than the purchase price and asked him to wire $20,000 and he got to keep $10,000 for his trouble (typical scam). The member called after depositing the check to see if the funds were available and we said yes they were available, he took that to mean that funds were guaranteed and proceeded to spend the money. Now the check was returned, the customer is claiming he is not liable because we did not hold the funds. Isn't the customer liable and don't we have the right to collect from him? He is threating to sue, so we have a case to stand on?

Regulation CC does not require a bank to hold funds. As far as I'm concerned the customer is liable for the funds.

Is there anything in the "small print" of the terms and conditions of your checking accounts?

I agree, you have a right to charge an unpaid item back to the depositor, and especially so if it wasn't deposited in good faith.

So what are we to do if we want to CYA?

"Yes, sir, those funds are available for you to withdraw, but we cannot guarantee the checks you deposited are any good, and they might come back to bite you in the . . ."

This is getting to be quite a popular scam. I've heard of three separate instances just today! Usually, these victims are selling a car over the internet. We should all keep our eyes open for this type of situation.

A teller in one of our branches CAUGHT a counterfeit Cashier's Check that a customer wanted to deposit. The customer wanted to deposit the check to their savings account and get cash-back.

The teller reviewed the list of reported stolen/counterfeit checks (I think the one on BOL!) and noticed the check was from a bank on the report. Her supervisor called the bank and found it was, indeed, counterfeit.

The customer told us he had been sent the check from someone in Nigeria!

Jweber, join the club! We are in the middle of a situation that is almost exactly as you have described. Customer deposited counterfeit item, asked if the funds were available which they were because no hold was placed, sent money to Nigeria, check came back, suing bank for telling him the check cleared. If you would like to private message me or e-mail me at tammerman@bankcnb.com I would be happy to discuss this with you further "offline". One word of advise would be to get your bank's legal council up to speed on this, because your customer will most likey come after the deep pockets of the bank and I am sure their lawyer is licking his chops over this one!

Unless you put a large item exception hold on this check, it would have been a next-day item if the customer had deposited it correctly. Credit approval or not it would have been available.

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Unless you put a large item exception hold on this check, it would have been a next-day item if the customer had deposited it correctly. Credit approval or not it would have been available.

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This is where Reg CC gets a little sticky - IMHO.

Technically the item deposited does not even come under Reg CC jurisdiction for a Next Day item becauase it's not really drawn on a bank - it only LOOKS like it's drawn on a Bank.

So the real heart of the issue is - who's responsibility is it to determine if a Cashier's Check is legit or forged?

Oooh - idea for non-interest fee income - We'll charge a fee to call the issuing bank to determine if your Cashier's Check is real or fake. (Yeah - a customer could do it themselves, but would they really?) I think a lobby sign announcing such a fee would give folks some reason to pause.....

I see a huge training opportunity here.

Why not ask the depositor what he plans on doing with the funds? Not only will this help you uncover answers such as 'I'm wiring the funds to the individual who bought my car,' but it is also a means of uncovering sales opportunities. From a relationship building standpoint, this may give you a chance to cross sell loans, investments, CD's, etc. in the case of legitimate transactions.

In a lot of cases with these scams, the customer is "warned" by the con artist not to disclose to anyone what they are doing. The scammer tells them that people will try to talk them out of it if they find out about this golden opprotunity. We directly warned one customer that they were being scammed, even showed them articles about the scam, and they later went through with it anyway. The bad guys smooth talked them into it.

Ouch.

I hope you weren't left holding the bag on that one.

ALL I CAN SAY IS "OWWWWW" SORRY

Small community banks may have a low enough volume of deposited cashier's checks to identify them all and have someone calling the issuing bank every day.

Unfortunately, for most of us, the cost and inefficiency of doing this far outweighs the benefits. But the basic question is valid - how do we address this growing risk?

Greed is the bottom line. People actually think they can make $10K doing almost nothing, and it is your fault it happened.

We had an ex-employee fall victim to a similar scam and now we will be seeking a suit, judgment and lien on her home in order to recover funds.

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If you are going to run the credit risk of allowing a customer to draw funds on an uncleared cashier's check shouldn't you do this for the protection of your bank?

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It depends on the amount of the check in relation to the balance in the account.

At the very least, however, I do wish 20/20 or Primetime would do a story. They are usually balanced in their approach and could explain why a bank would make money from a "cashier's check" available - but the liability is still on the depositor.

You know - most Escrow and Title Companies refuse to accept a Cashier's Check to close a deal unless the check has been deposited for X number of days before. That has been their policy for quite a number of years. If you have to bring in $$ to close on the final day, you usually need to wire it.

Has anyone considered lobby sinage and/or stmt messages to reiterate to customers the risk of drawing against uncollected funds?

Before setting a threshold, we need to find out what is the median amount of these fraudulent items. I would suspect the amount is lower than $10,000.

My husband and I are victims of this scam, and we started a message group and website at http://www.geocities.com/scamvictimsunited/ to help spread the word to others. In just a few months the membership of the group has grown very quickly. The biggest problem is that the victims of this scam have no where to turn to. There is no agency or department that will take our information and investigate the scam. The FBI has told us our situation is too small for them to look into and the Secret Service just puts our info "on file" but no one is trying to track these people down. The people running these scams need to be brought to justice! Let's just think for a minute . . . where do you think all that money is going to and what is it buying?

I do feel that our fight has had a few victories. I have been contacted by people who have found our site in time to realize that the deal that they were entering into was a scam, and it saved them thousands of dollars. We have also worked with Western Union and I know that they have started blocking the names and addresses of know scammers so that if another person tries to wire that same person money the transaction will not go through. But these are just baby steps.

There needs to be laws that hold the banks responsible for releasing the funds from these checks before they verify that the check is good, and then telling the customer that the check is good only to find out days later that it is not. If they know it takes 10 days for the check to clear they should have to tell the customer that, and if they do not they are the ones that should be out the money. Also, banks are issued warnings from the FDIC when cashier's checks are stolen from other banks, yet they do nothing to increase the security measures that they take when handling a cashier's check.

Below is a list of recommendations that we presented to our Senator's office to help protect others from this scam.

Counterfeit Cashier's Check Scam - Ideas for Consumer Protection

We are asking our government to take measures to protect banking customers from this type of unfair and deceptive business practice. The banking system is failing to verify these checks and allowing counterfeit cashier's checks to pass into the system which impedes the national interest of the United States because it finances crime, undermines the integrity of the international financial system, impedes the international fight against corruption and drug trafficking, terrorism and distorts economics. United States banks are frequently used by other countries to receive large funds from unsuspecting Americans because the banks often fail to screen, monitor and check the transactions for their customers.

Our recommendations for improved customer protection from counterfeit cashier's checks include:

- Requiring banks to give full disclosure of the true time period for check clearance to the customer
- Multiple security watermarks on all cashier's checks to make them more difficult to counterfeit
- Require that funds cannot be released until verified as good by the bank, unless the customer signs a release
- Hold financial institutions liable for any monetary loss due to the customers reliance on false, inaccurate or misleading statements by bank and their employees
- Mandatory holding periods on all checks of a substantial amount, unless the customer signs a release
- Setting a time period, such as 30 days, in which by law all banks must verify the funds are good on all cashier's checks. Any issues with the check after this time period are the responsibility of the bank.
- Creating an agency or department of the government that will investigate counterfeit cashier's check scams and oversee that the banks are following the laws that may be created in relation to cashier's checks

These items will help to ensure good business practices, customer financial safety, and reduce the use of counterfeit checks as a means of fraud. If financial institutions understand that they will be help totally liable for any monetary losses due to false or misleading statements or neglect to follow the above described check clearing and verification process the financial institutions will take measures to protect themselves from this type of loss, thus protecting the customer, the financial system, and reducing the criminal activity of producing counterfeit cashier's checks. Our financial institutions are our last defense against this type of fraud, so it is important that these customer protection laws be created to ensure that they are working with and for their customers in order to reduce such activity.

The public needs to know that cashier's checks are not any safer than personal checks.

Thank you,
Shawn and Jeff Mosch
There is strength in numbers. Scam Victims United
http://www.geocities.com/scamvictimsunited/

I am sorry that you had to find out about this scam the hard way. And I applaud your efforts to educate others, as well as the positive results of your efforts.

But I invite you to take a closer look at the above posts to see what banks are doing to put the brakes on this scam when they spot it. We are forced to balance our efforts in reducing fraud with complaince with federal funds availability rules. The Expidited Funds Availability Act is one of the most difficult to understand- even for a banker. And consumers, as well as frontline staff seldom distinguish between when funds are available and when a check has cleared.

All in all, there are a number of different solutions to this problem, and we need to seek out the ones that provide the maximum benefit with minimum disruption. Changing funds availability rules will not accomplish this, nor will holding banks liable for their customers' losses, as both would severly disrupt our payments systems.

I, too would love to see more agressive pursuit of the people that commit this fraud, but with terrorists taking up the bulk of our investigative resources, I cannot have any realistic hope that this will happen.

I believe that consumer education is our best weapon, as is the case with most fraud and deception. Sites such as this one and yours go a long way toward achieving that end, and I encourage you to continue to get the word out. If you are looking for additional resources, please check out the links at the bottom of the second column, under the Nigerian Fraud heading, on the Banker's Online Launch Pad.

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There needs to be laws that hold the banks responsible for releasing the funds from these checks before they verify that the check is good, and then telling the customer that the check is good only to find out days later that it is not. If they know it takes 10 days for the check to clear they should have to tell the customer that, and if they do not they are the ones that should be out the money. Also, banks are issued warnings from the FDIC when cashier's checks are stolen from other banks, yet they do nothing to increase the security measures that they take when handling a cashier's check.

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You must also understand that these checks represent a very small portion of the total transactions a bank handles every day. Federal law REQUIRES a bank to make a deposit from a "Cashier's Check" available the day after deposit. If banks had to start calling on every cashier's check that was deposited, service charges would have to go up to cover the costs. Would you accept a $10 charge for depositing a Casier's Check?

Banks are subject to criticism and penalties if they dare place holds for a longer period of time than allowed by the regulation.

If the law you proposes passes, then banks may simply refuse to accept Cashier's Checks for deposit. The alternative is an expensive and time consuming routine known as sending a check for colletion.

A very simply way to protect yourself is to call the bank that issued the Cashier's Check to see if it is a valid and authentic item.

Banks do not want to see their customers get ripped off, but we cannot oversee every transaction a customer may want to do. The best thing is to get a national news story about this scam with a warning to people that they need to confirm if a Cashier's Check is really authentic before accepting it on face value.

I've seen people really scruitinize a $100 bill, but not give a second thought of how easy it is to counterfeit a "Cashier's Check." Watermarks and security measures would only be good if the people receiving the check knew exactly what those security measures were supposed to be. I have seen counterfeit's that include so-called "security features." Requiring a uniform set of security features may also not solve the problem as it would simply be a matter of time before the fraudsters discoverd how to counterfeit the security measure, and again, is the general public really going to learn all about those security measures? We still have customers who write their PIN number on their ATM card!!!

If banks are supposed to instead accept liability for ensuring all of the proper watermarks and security measures are in place, the again - either the processing fee will increase, or the bank will simply refuse to accept the items for deposit.

I too am sorry that you had to learn of this scam first hand, but trying to put the blame and/or burden of prevention on banks is wrong and as noted if passed will result in very negative service when it comes to cashier checks. The first line of defense is the customer. As the old saying goes "if it sounds too good to be true, then it probably is".

I'm not going to be as nice as the other posters, but banks and other financial institutions cannot be held responsible for the general public's lack of scrutiny, or in the case of most of these scams the customer's GREED.

I would like to thank you for seeing that there is a problem here, and maybe together we can think of a more workable solution to the problem of counterfeit cashier's checks.

In my case, when I went to deposit the check I asked how long it would be until the check was clear, and the teller responded that the funds would be available in 24 hours. I then restated my question telling him that I wanted to know not when the funds would be available, but when I could be sure that this was a good clear check and I could use the money and never have to worry about it coming back and bite me in the butt, and the teller said "Tomorrow afternoon ma'am.  No problems". I waited 48 hours, twice the time I was told by the teller would be enough. It was one week after the date of deposit that the bank called and told me that the check was counterfeit.

Now,if the bank teller would have said "Funds are available in 24 hours but it may take up to 7 - 10 days for the check to be clear" then I would have waited 10 or more days to go ahead with the transaction. Would it really be that hard to require tellers to inform customers of the true time for check clearance, not just funds availablity?

I have seen and heard of some banks that are not releasing any of the funds until they can confirm that the check is clear. They not only want to protect themselves but also their customers. If it is too much to ask all banks to do this, then a simple notice would to each person depositing a large dollar amount cashier's check would help cut back on this scam too. For any of you that already do this, please feel free to refer your customers to my site at http://www.geocities.com/scamvictimsunited/ if they have any doubts. Maybe once they see that their are hundreds of us, and those are just the ones I have found, that this has happened to in the past few months they will see it is a scam.

Another idea that was brought up by the victims support group I started was a signed release. If a customer wants to use the funds from the check before the check has been cleared they have to sign a release saying that they take full responcibility if the check comes back bad. That way people who are doing legit business and know the person who gave them the check could sign that release and get the funds right away. I know if my bank had asked me to sign such a release I would have not gone through with the transaction as we did.

To me, these seem like very simple things that the banks could start doing right away to help stop this scam. I have seen the support of Western Union and car websites in fighting this scam . . . Western Union will block a name once it is reported as being a part of these scams so when anyone else who tries to wire to that same name it will not go through, and the car websites are posting warnings about this scam for the people who are using their sites to sell their cars. It was a very simple thing on their end, but it has saved hundreds of people in the past two months alone.

We need to find a way to beat these scammers at their own game and protect everyone . . . banks and customers.

Thanks,
Shawn Mosch
There is strength in numbers. Scam Victims United
http://www.geocities.com/scamvictimsunited/

What would elevate this if a show such as PrimeTime Live, 20/20, or 60 Minutes would do a piece on this. Hopefully, it wouldn't deteriorate into a "bank-bashing" piece, but should show the story that banks AND customers need to work together to fight this growing crime.

If the story could be picked up on local news shows, and perhaps hit the front page of Yahoo, MSN, etc., then more people would be aware.

BOL does a great service in producing the list (alphabetically and chronologically) of reported stolen and counterfeit Official Items.

If you get a chance, take a look at the "Cashier's Checks from Tax Refund Company"? thread in the General Forum to see the quandry banks are placed when a customer presents an item and expects immediate credit.

In the case of the teller who responded to your questions, she may have been expressly instructed that all Cashier's Checks get immediate credit. Perhaps that bank just got stung in an exam or internal audit. Understand that a LEGITIMATE Cashier's Check cannot be returned as NSF. So the REAL question to ask is "How do I know if this is a legimate cashier's check instead of a forgery." I would hazard a guess that if you had posed the question in that manner, (using the word "forgery") the teller would have, at least, referred you to a supervisor.

Believe me, banks would like to place a hold in certain situations, but unless we can fit the situation into one of the current Reg CC reasons, we are somewhat stuck.

Don't even get me started on those credit-card advance checks.....

>>but banks and other financial institutions cannot be held responsible for the general public's lack of scrutiny, or in the case of most of these scams the customer's GREED.>>

I am just wondering . . . where is it that I was being greedy? When I found this site and this message thread I was glad to see that their were some people in the banking business that saw this as a problem and a scam, but I take great offence to anyone that says I was being greedy. If you would like to take the time to read my story, my husband and I were selling a car. We were sent a cashier's check for payment of the car and shippment of the car to the buyer. The bank told us to wait 24 hours, we waited 48 hours, and then once we had been assured that the check had cleared by our bank we sent the portion that was for transportation of the car to the shipper. We keep the amount we were asking for the car, nothing more. Where is the greed in that?

I think that the banks should be held responsible for telling me that the check would take only 24 hours to clear and be verified as good when they knew it was different. I work in retail, and just last month we had a cashier tell customers that the sale we were running went until the end of the month, when it really ended on January 26th (the last Sunday of the month)but when those same customers came back in this past weekend and wondered why things were not ringing up at the sale prices, we honored what they had been told by our employee and gave them the sale prices. It was not the customer's fault that the cashier did not give them the right information.

Yes, these check scams are on a much bigger scale, but the basic idea is the same . . . tell the customer the truth and if you mess up and give them the wrong info then you should be accountable for it. It is called customer service.

Shawn

I apologize for the anonymous posting, but we as bankers obviously have some risk in this area.

Why don't we tell a customer when a check will clear? Because there is no way we can know for sure when a check will clear. A bank may have a right of return on an item for up to one year if the right set of circumstances exist. Would it ever be feasible to place a one-year hold on a deposit? Of course not.

We want to help our customers--that is our business, but we must understand that most customers presenting a cashier's check is presenting a valid item. An item that they probably went out of their way to get, just so they would not have any problems with the availability of funds.

Why don't we just call and verify each item? Banks are not always open when you accept a deposit and even if they are open..have you ever tried to confirm a cashier's check issued by a large bank? I tried the other day and it took all day.

Believe me, we all want a better solution for verifying funds. Our bank lost over $250,000 last year in Nigerian fraud type scams. And if the smaller community banks keep losing this type money ( and that is a lot of money for a community bank!), we will ultimately all pay the price.

>>Would you accept a $10 charge for depositing a Casier's Check? >>

Yes, if that fee assured me that the check was going to be verified as good before the funds were released, then I would. And I know hundreds of others who would agree with this too.

>>The best thing is to get a national news story about this scam with a warning to people that they need to confirm if a Cashier's Check is really authentic before accepting it on face value.>>

We have been on The Evening News with Dan Rathers, two local news shows, two newspaper articles and in Wired magazine. We have another article due to come out in Minnesota Law and Politics next month. All of this media has helped, but what about the people who do not see or read about the scam? If we had the banks working with us to fight this then we could protect all customers, not just the ones that were sitting at home on November 1, 2002 and saw the Dan Rather's news report.

Shawn

One choice you have to insure an item is collectible, is to send the item for collection instead of depositing it and allowing it to pass through the forward collection system. Most customers become very upset if we suggest this method, however, because they do not want to pay the $10 collection item fee.

>>Because there is no way we can know for sure when a check will clear>>

Then tell us that! If my bank would have said, "We have no way of right now how long it will take for the check to clear, some take a few days and some longer. To be sure the check is good you should contact the issuing bank" that would have been enough for me.

Again, I work retail, and we always get people saying "When will you get more of this item in?" We have no way of knowing exactly what items we are getting in each and every day until we unpack the entire truck and open all the boxes . . . but we tell the customer that! That way the customer does not come back in 3 days only to find that we still do not have the item they want in stock. I guess I just don't see how the check clearance issue is any different . . . I wanted an answer from my bank so I could make an informed decision, and they let me down by not giving me the info I needed.

Shawn

>>One choice you have to insure an item is collectible, is to send the item for collection instead of depositing it and allowing it to pass through the forward collection system. Most customers become very upset if we suggest this method, however, because they do not want to pay the $10 collection item fee. >>

I had no idea that this was even an option. I wish my bank had told me this because I would have paid $10 to ensure my safety. That is a very small price to pay to avoid this nightmare.

Why don't banks inform their customers about this option?

Shawn

Shawn,
I agree that the only greedy party to your transaction was the person that ripped you off. And I'm glad you recognize that not all banks handle these situations the way your bank did.

For example, our bank provides a quarterly newsletter to all of our customers that crosses all bank functions- including security. We have found this to be a great vehicle for alerting our customers to new scams, or even to new twists on old scams. I know that it's only one small step, as we are only one bank. But I feel that we are doing what we can to be a part of the solution.

On Friday Jan. 31-03, my security officer came to me with a cashiers check for 8700.00 originated in San Antonio, Texas, payable through a bank in Ohio, returned as counterfeit. The scam was via our customers selling a tractor over the innernet to the other 'customer'. Our customer will have to make it good. Then later in the afternoon, he came with what looked like a good check from an Insurance Company payable through a bank in Canada for $19780.00. The tipoff - the customer told us they had won 25 million in the German lottery. The person contacting them wanted them to send money to get it, but they said no -to take the fees out of the first check; they were to keep 2 thousand, and then send money back or allow for an auto withdrawal. Our customer refused, but has the check. We put an exception hold, and aren't allowing any money to go out until we're sure it's ok. The big question - on the first counterfeit check - neither of the banks (the bank or the payable through bank) are not listed on your alert or in the section below. How can we get the word out to other bankers? We know this check is no good and looked very legimitate. - The second question - relating to the second check (and first) is there any EASY link to find bank routing numbers and/or telephone numbers a person could call and verify the authenticity of a document?

The easiest way to match a bank routing number to a name is to search the routing number on Google. When verifying funds on a suspect check, make sure you look up the number independently of the item. NEVER assume the phone number on the face of the item is the right one.

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Then tell us that! If my bank would have said, "We have no way of right now how long it will take for the check to clear, some take a few days and some longer. To be sure the check is good you should contact the issuing bank" that would have been enough for me.

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Sean - it is unfortunate but you must have been caught in the leading edge (aka "bleeding" edge) of this type of scam. More than likely, your bank had not experienced counterfeit cashier's check, and the teller was probably unaware of the scam.

The reason a Cashier's Check exists is that it is supposed to be "as good as cash." Once issued, a valid Cashier's Check cannot be stopped or returned NSF. That is why Regulation CC puts such strict rules on a bank's ability to place a hold on funds from a deposited Cashier's Check.

So when a customer asks "when will the check be good", the assumed answer is that a Cashier's Check is good right away.

The word is spreading as one of our tellers caught a forgery that a customer was attempting to deposit. What tipped her off was the customer's request to get cash-back right away. However, if we had to stop and verify each and every Cashier's Check, Money Order, etc. that gets deposited, the already long lines in our lobbys will get absurdly long.

Unfortunately, the banking industry does not turn on a dime. The word of this scam is spreading, and there are probably vendors designing lobby signs and notices to alert customers to this scam. Keep in mind that there are countless scams out there that can affect a banking customer, and if we had a notice to warn customers on each and every one of them, it would be almost as long as the lobby line.

The KEY for people to ask at a bank is - "How do I know if this Cashier's Check is legitimate?" Many tellers work part time, and most get paid little more than minimum wage. Turnover among the teller workforce is high. The average teller will not be able to anticipate every type of dangerous situation you might be facing.

BTW - If you received the counterfeit check in the mail, did you contact the Postal Inspector? U.S. Postal Inspectors

Bonnie, you are correct, the public requires
education in this matter. No matter how many local
seminars I can manage, I think it's worthy cause
for 20/20, et al!

Shawn, first let me say that I am sorry that you were scammed; however, you were taken advantage of by some despicable individuals, not your bank. I have spoken with several people who were victims of this type of scam, and while I feel bad for them, I know that there was little that we could have done to prevent what happened. For one thing, in each situation, the individuals did not give us all of the details about the transaction they were conducting. Some of them were different from your situation, but it seemed that the person who sent them the checks had "warned" them that this transaction was highly confidential, not to share too many details.

If you had a concern, I feel that had you communicated the details of the transaction to a bank employee, a lawyer, or law enforcement this could have been prevented. I applaud your efforts to get the word out to the public about this scam, but I think your anger and cries for reform in the banking industry are misplaced. There was a time prior to Regulation CC when banks could hold checks for virtually however long they wanted. Can you imagine a bank placing a hold on your paycheck for 3 weeks until they were sure it cleared? Regulation CC came about to expedite funds availability for deposited items, the trade off is that sometimes we cannot hold items for as long as it takes them to clear.

Finally, no matter what, your signature on the back of that cashiers check is your guarantee to the bank that you are responsible for that item if it is returned for whatever reason. Your bank has the obligation to identify you as the payee of the check, aside from that, we have no binding legal connection to the drawer or sender or the item. Your bank was dealing with you, a trusted customer, and did not know that the Nigerian con artist was involved. Basically, when you sign the back of a check, you become responsible for it and while most people will say that they did not know this, it does not excuse them from that responsibility.

Again, I am sorry that you were taken advantage of, but the focus of your efforts is better spent trying to inform others, not trying to point fingers at the banking industry. Unfortunately, everyone but the Nigerians lost in this situation, you have suffered a monetary loss, and your bank has lost a valed customer.

Bonnie,

>>The KEY for people to ask at a bank is - "How do I know if this Cashier's Check is legitimate?">>

I guess our mistake was that we thought to know that the check was legit all we would have to do is ask our bank how long for it to clear . . . if it does not clear it is not legit.

>> Many tellers work part time, and most get paid little more than minimum wage. Turnover among the teller workforce is high. The average teller will not be able to anticipate every type of dangerous situation you might be facing.>>

So is it the customer's fault that the bank is not fully training the tellers on how to handle situations like this? I have brought up the fact that I have worked retail already, and every business that I worked for if an employees told a customer something, weather that was a part timer who just started or a full timer who had been their for years, we stood by it. The customer is going off of the information that they are given by the employee . . . are we supposed to ask each employee "How long have you been here and are you fully aware of all of the rules and guidelines?" before we work with someone? That is the banks job to make sure that the employees are doing their job.

>>BTW - If you received the counterfeit check in the mail, did you contact the Postal Inspector? U.S. Postal Inspectors >>
It was sent FedEx

Shawn

>>For one thing, in each situation, the individuals did not give us all of the details about the transaction they were conducting.>>

In my case I told the teller that this check is from someone I do not know for the sale of a car over the internet and I want to make sure I know when it is good cleared money that I can spend without having to worry about it ever coming back and biting me in the butt. I don't think I could have been any more clear than that.

>>you were taken advantage of by some despicable individuals, not your bank.>>

I feel like I was taken by both of them. I know that the real "bad guys" are in Nigeria, but the part that gets me is that this scam works because the scammers know that a bank will say that funds are available within 24 hours, but it will take much longer for the check to clear. How do we make sure the average banking customer understand that too?

You people are in the banks . . . what can we do to warn the customers? Is there a way to do it with out changing laws?

Shawn

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So is it the customer's fault that the bank is not fully training the tellers on how to handle situations like this?

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I am not excusing a bank that has a poorly trained teller, however, a teller is not in a position to know everything that could potentially affect you. By asking if it was "good cleared money" the teller's response will be "A Cashier's Check is considered good funds." The teller does not know that the check is counterfeit at that time. As I said, at the time that it happened, the bank was probably unaware of the scam.

I would draw a very loose analogy to that of a customer that asks the store clerk "Will the colors run on this blouse?" The store clerk responds that the colors shouldn't run. The customer is later upset when upon removing the ruined garment from the laundry, discovers that item was "Dry clean only." The colors wouldn't have run if the blouse had been dry cleaned. You were asking one thing, but the teller understood the terminology as something different and responded according to how she understood your question.

Compliance with Reg CC is something that examiners love to drive home as it can be an easy "gotcha" during an exam. Bankers get gunshy about having "obvious repeat violations" and we drill into front line staff that you CANNOT HOLD a Cashier's Check. That's federal law. Part of an amount of a large cashier's check can be held, but you should hear the howls of protest when we do!!! When you have an impatient customer with a long line of impatient customers behind him or her, the safest way to not violate federal law is to not place a hold on any portion of the check. If you want to see how difficult Regulation CC can be, please check out some of the resources on this website that deal with Reg CC.

However, I still need to get back to the point that news of this scam IS spreading, and many banks are telling front line staff to be cautious of these kinds of transactions.

I will try to be as cordial as possible, but in essence Shawn got taken, he’s mad and he’s blaming the bank. He’s got to blame someone and the bank is the easiest and the closest.

If he works in retail, and from his comments he must be in some sort of management or supervisory position. If that’s the case (but maybe not) he should have some knowledge of the difference between cleared funds and available funds and how long it takes a check to clear. After all, most retail stores will not give you a refund, other than a store credit, for 10 days if you write them a check and then return the item.

He must have had some suspicion of the check because of the questions he asked the teller, but I also think he got the answer he was looking for, and as others have said a cashier’s check is suppose to be as good as cash, the teller answered the question correctly based on the regs and the item presented to her/him.

By the way, if his store had been paid with one of these cashier checks under the same circumstance where the person using the cashier check was not aware it was counterfit, and it got returned, I bet the store would be going after the person to recover the money. So was it the store’s fault this person got taken because they didn’t verify the funds properly? I don’t think so. This may not be a good analogy, but the point is that neither the store nor the customer was at fault, but the store wants their money from the person endorsing and spending the check because, as another poster said, once they endorsed the check they became responsible for it. The same applies in Shawn’s situation; once he endorsed the check he became responsible for it.

Shawn, I’m sorry you got taken in this scam, but it is not your bank’s fault.

That’s all I have to say about that.

>>I would draw a very loose analogy to that of a customer that asks the store clerk "Will the colors run on this blouse?" The store clerk responds that the colors shouldn't run. The customer is later upset when upon removing the ruined garment from the laundry, discovers that item was "Dry clean only." The colors wouldn't have run if the blouse had been dry cleaned. You were asking one thing, but the teller understood the terminology as something different and responded according to how she understood your question.>>

And in every retail store that I have worked in we would have said to that customer when they came back with the blouse that we will give them a new one, and we are very sorry for the problem. Then we would look at the register ID info to see who was the cashier that helped her and train that cashier to always check the tag before the give the customer any garment care instructions, and if it is still not clear to them, call a manager.

We would always take a problem situation as a learning experience so that it would not happen again to other customers . . . I guess I feel like a large number of banks are not learning from this, and actually looking to see what they can do to help protect their customers.

>>you CANNOT HOLD a Cashier's Check. That's federal law. Part of an amount of a large cashier's check can be held, but you should hear the howls of protest when we do!!! >>

And that is why I suggested the release form. If a customer wants the money now because they know the check is from their brother and it is good, then they sign a release saying that they are aware that this check has not yet been "cleared", so the bank is in no way liable for anything that happens with the check or the money. But if the person does not know the sender of the check very well, this may make them rethink and wait for the check to clear.

It would be like signing out of a hospital against medical advise . . . if you sign the papers and go you cannot sue the doctor later because you went against their advise. It was your choice after you had been told all of the facts.

>>many banks are telling front line staff to be cautious of these kinds of transactions.>>

That is good . . . I guess I just want to know what I can do to help and spread the word faster. I hate it when I open my email and there are 10 more emails from new victims, and this is daily. I want to be getting more emails that say they heard in time to save them or that their bank caught it in time.

Shawn

>>The best ways to inform consumers about the threat of counterfeit checks, which have been popular not only with Internet auto sales, but also with Internet employment search sites, are the channels we are usign now. Your web site and media appearances, the newsletter I mentioned earlier, this forum, and other media that people actually pay attention to.>>

I know that all of the things you mentioned are helping, but I am just thinking about all of the banking customers who may not see my message in time. If every bank would take measures to also inform thier customers about this scam, as I am trying to do, their would be a lot less victims.

>>The downside is that just as Nigerian fraud has shifted from advance fee to counterfeit checks, it will shift again to something new when enough people are on to the scam. >>

I know, I have thought of that too. But let's try to stop one before we start to worry about the next one.

Shawn

At one time, somebody wanted a law that said banks must make funds from cashier’s checks available on a next day basis. They got it. Now, some people appear want a law that says banks should warn people about cashier’s checks. They may get what they want too. Banks will comply with that requirement as well.

It’s unfortunate when anyone gets stuck with a bad check. However, the fact that it’s a cashier’s check does not enhance the loss. Most checks are paid on presentment. However, an even higher percentage of cashier’s checks are paid on presentment. If consumers are entitled to a warning that a deposited check may not be paid, giving it on cashier’s checks alone is ridiculous. If there is some naturally occurring responsibility on the part of banks to explain the ramifications of an endorsement to their clientele, it applies to all checks, not just cashiers checks.

I am sympathetic to anyone who gets stuck with a bad check, but cannot follow the logic that it’s the bank’s fault that one person issued a fraudulent item and that another person accepted it.

Shawn-First, I will reiterate the feelings expressed by others on the board discussion; I am sorry you were the victim of a scam. I doubt I can clarify the position of most banks any better than the guidance and opinions already offered (by some very intelligent and notable persons in the national compliance arena), but I'll offer by $.02.

You mention that you want to hear more about the times the bank has saved a customer from being scammed. Don't hold your breath, because it is not going to happen. Banks identify potential risks every day and rarely receive as much as a passing "thank you". People love to share the horror stories, but they rarely share the victories.

Banks regularly identify potential elderly abuse (ranging from the greedy relative to the thieving roofer or caretaker), counterfeit checks and cash, altered checks, and the list could go on and on. Sometimes we are thanked by our customer and sometimes we are sued. We then get to spend thousands in court explaining to the judge why we declined a transaction or closed an account.

I can't say specifically what I would have done in your situation, because I haven't been there. But I think I would have taken the initiative to verify the item myself with the paying bank rather than relying on a teller to tell me when a check presented against another bank would "clear". The answer you received was basically correct--IF it had been legitimate. Unfortunately, it was not. Every question would have multiple answers if you factor in all of the "what if" scenarios.

You asked me earlier why we don't tell our customers about the collection service. Do you have any idea how many services most "full service" banks offer? It would require volumes to disclose every service offered by most banks. And the bottom line is...most consumers don't want to hear about that list. If they need a service, they will ask us for it. We have to be reasonable in our disclosures and expectations. Your bank is a depository institution. They clear your paper items for you (at a very reasonable cost I venture to guess), pay you interest if you want it, send you account statements, provide you with electronic access to your funds, work with you to resolve errors in electronic processing, and provide a host of other services. They have no crystal ball to tell them which items will ultimately be paid and which ones will not. Each depositor should know the source of the items they present for payment and take responsibility for those items through final collection. The banking system simply can't work any other way.

Although banking is a business, I would guess that it is indeed not like most other retail businesses. Speaking as a community banker, we work hard to provide good service to our customers because most of them are not just customers--they are our friends. We go to church with them and we sit at the baseball park with them. We laugh with them when they have new grandbabies and we cry with them when they lose someone they love. And we take it very personally when they are victims of any crime. So please don't try to make this a "bank against the customer" crime. We are all on the same side--the good guys against the bad guys.

Brenda, that was beautiful.

Shawn, just another point, do you realize how very impractical the "release form" idea is?
What about merchant accounts? Is a teller going to fill out a form for
their deposits because, let's say, in the merchant's deposit of
1400 checks that 5% of those checks may not be good, therefore, they should
have 70 release forms prepared? I don't know how your bank runs, but if we had to use
a teller's time that way, I think our remaining customers would
pretty annoyed having to wait longer than the usual 2-3 minutes to be assisted.

I understand that you were "taken" and I am sorry that you were a victim,
owever, the government had set up
the Expedited Funds Availability Act because consumers were complaining
that they did not have use of their funds quickly enough. So in response to
the demands of consumers, the banks were forced to comply.

Maybe you should write your Congressman and have it repealed.

>>I will try to be as cordial as possible, but in essence Shawn got taken, he’s mad and he’s blaming the bank>>

And I will try to be cordial too . . . if you would have read my first post in which I said "My husband and I became victims of this scam" you would see that I am a SHE. I think that this alone shows that you are not really listening to what the issue is here.

>>and from his comments he must be in some sort of management or supervisory position>>

My current work, besides being an at home mother of two, is a part-time position as a custom closet salesperson, but I have worked for several different companies over the years at several different levels.

>>have some knowledge of the difference between cleared funds and available funds and how long it takes a check to clear>>

I was aware that their was a difference between funds available and check clearance, and as I have stated in past posts, I made sure I asked about check clearance. I even questioned the teller when they said 24 hours. I said "I thought it took more like 10 days for a check to clear", and he said no, with a cashier's check it is clear in 24 hours. Since in retail I have never accepted cashier's checks, just personal checks, I assumed that the bank employee knew what he was talking about when he said that cashier's checks clear faster than average checks.

>>By the way, if his store had been paid with one of these cashier checks under the same circumstance where the person using the cashier check was not aware it was counterfit, and it got returned, I bet the store would be going after the person to recover the money. So was it the store’s fault this person got taken because they didn’t verify the funds properly?>>

We do not accept cashier's checks in retail situations. Cash, personal check, or credit cards please. And, with all checks, they have to be accepted through our check system or the transaction will not go through. If anyone overrides this system and passes the check through and it does come back at the store, THE STORE is the one out the money (and the merchandise in that case)

And, years ago there were counterfeit $50 bills going around my local area and the police did warn all retailers to be on the look out for them. Had we taken one, we as the business would have been out the money. So what did we do? We did not accept any $50 bills. We had some customers get very upset when we asked for smaller bills, but once thier transaction was complete we could tell them that the reason was because their were counterfeit $50 going aroud the area. These customers actually thanked us and said that they would go to their bank to have the bank check the $50 that they had, and make sure that they were good, and exchange them out for smaller bills so that they would not run into this problem again at other stores in that area.

>>I’m sorry you got taken in this scam, but it is not your bank’s fault.>>

I do not blame the bank for the scam. I blame them for not giving me the correct information to the specific question that I asked, and then for holding me responsible when I followed those directions.

Shawn

Shawn,

I hate to reply again to this thread as it is obvious to me that anything that anyone says to you is not going to change how you feel. You have chosen bits and pieces of everyone's responses and came back with a rebutal. The fact of the matter boils down to - you endorsed the back of the check and you assumed responsibility for it. You have chosen not to reply to this basic aspect of this situation. Your recourse is back to the person who issued the check to you and your bank's recourse is back to you.

In reply to:

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And that is why I suggested the release form. If a customer wants the money now because they know the check is from their brother and it is good, then they sign a release saying that they are aware that this check has not yet been "cleared", so the bank is in no way liable for anything that happens with the check or the money. But if the person does not know the sender of the check very well, this may make them rethink and wait for the check to clear.

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The bank is not liable for items you deposit to your account so the signing of a "waiver" is not logical.

As far as wanting to shut down Nigerian scams, you are preaching to the choir whe you are talking to us. We hate these scams and are already doing all we can to protect our customers and ourselves. We are required to know our customers, and when you are engaging in the sale of a car or anyother business dealing you need to be aware of who you are dealing with as well.

Again, sorry you were taken, but you are pointing a finger in the wrong direction.

If anyone hasn't read the letter proposed by
scamvictimsunited, click here
it's pretty interesting to see what the outcome could
possibly be.

Really, I would like to get this thread back on track. I posted to it because it appeared to be a group of people in the banking business who also saw that this scam was a growing problem and were looking for ways to help prevent any loss . . . to the bank or the customers. Since I have joined, the messages have turned to "you did it now accept it" . . . where did all the people who wanted to find a way to protect everyone go?!?

Past posts by bankers included . . .
-I see a huge training opportunity here.

-Why not ask the depositor what he plans on doing with the funds?

-What about signage in the lobby?

So to get things back on track I would like to suggest warnings on bank websites about this scam. I have had the help of several car selling websites, like americandreamcars.com, who have posted warnings on their sites for the sellers of cars. This has save hundreds of people in just the past few months.

Do any of the banks have any sort of newsletter where they can warn people that way?

I accept that I was scammed. I accept that the banking rules hold you to release the funds. I accept that the bad guys are in Nigeria. Can we try to find a way to warn people on a larger scale. I am doing what I can with my website, but if the banking industry would also join the fight against this scam by warning their customers think of how many more would be saved!

Will you help me?

Shawn

As Bonnie M. pointed out in an earlier thread,
new exposure (20/20, etc) would be good. The banks in my
locale do community service training in areas
such as fraud and ID theft, however, we've
neither the time or resources to cover the
entire state. And, personally, I feel that consumers
should take some responsibility for educating them-
selves. There are resources everywhere, they just
need to be broadcasted.

I assume that you have contacted the Federal Trade Commission. The FTC Web Site is an excellent soure of consumer protection and warning information. The FDIC Consumer News publication is also another avenue to utilize in putting this information in the hands of the general public.

I think I can speak on behalf of most banks that we would welcome the opportunity to insert a consumer protection leaflet in our customer statements. We could also have a warning leaflet or brochure available for customer pick up at our branch office locations. Perhaps you could try to petition the FTC (or some other government protection agency) to prepare and furnish us with these types of consumer protection materials.

Because of the declining interest rate environment, all of our budgets are TIGHT, but we certainly want to alert our customers of current scams and frauds.

Thank you for your suggestions. I have been emailing shows like 20/20, Nightline, Prime Time, Dateline and others on a weekly basis . . . none of them seem to want to do the story. I have sent out story to magazines and newspapers also.

I have also contacted the FTC, FDIC, FBI, Secret Service, Comptroller of the Currency and the Attorney General. All I get is "that is someone elses department, call this number" and then that one tells me the same thing.

I am looking into starting a non-profit organization to help spread the word about this scam sometime soon. If we created a warning flyer/leaflet who in the banks would I contact and speak with in order to find out if they would give them to their customers?

What about the idea of the warning on the websites for the banks? Since our check came from the Bank of America I know that if we had gone to the website for that bank and seen that they had a warning we would not gone on with the deal.

What about a press release from the banks? Would they do that? It would not cost them anything and the local news might pick it up and that would help spread the word (plus it would make the bank look even better because they would be warning the customers)

Would any of these work?
Shawn

I sent a summary of the situation to the FDIC and received a response from the person who electronically sends out the FIL's. He responded that he has given the information to his colleagues who work on these matters and see how they want to proceed.

Shawn - again may I say I sympathize with what happened to you. The reason you probably are getting the resistance you are receiving on this board is your proposal that basically seems to hang all responsibility for fraudulent items on the banking industry.

Your proposal includes:
Requiring banks to give full disclosure of the true time period for check clearance, not just funds "availability", to the customer
We have pages and pages of disclosures, and most customers do not bother to read them. The rules regarding check clearance and not simple, and processing times are contingent on many factors. Please feel free to read all of Regulation CC at this webpage: Reg CC from the FDIC Rules and Regulations

- Multiple security watermarks on all cashier's checks to make them more difficult to counterfeit I think I discussed earlier why this would offer little protection.

- Require that funds cannot be released until verified as good by the bank, unless the customer signs a release
Again - a paper tiger nightmare of more disclosures, record retention, and increased costs to both banks and their customers.
- Hold financial institutions liable for any monetary loss due to the customers reliance on false, inaccurate or misleading statements by bank and their employees
There are already laws on the books that take care of this. The problem is exactly what was mis-leading? You have one interpretation on how you feel you were mis-lead. The teller probably felt she answered your question as she understood it. Is that false or misleading? Usually a judge and jury will decide that.
- Mandatory holding periods on all checks of a substantial amount, unless the customer signs a release
Please review Reg CC. However, if you are able to get Reg CC revoked, you will have earned the gratitude of just about everyone on this forum!
- Setting a time period, such as 30 days, in which by law all banks must verify the funds are good on all cashier's checks. Any issues with the check after this time period are the responsibility of the bank.
Another recordkeeping and documentation issue with increased costs and delays for everyone involved.

Your proposal above runs contrary to the entire check processing system set up in this country. The check processing system is an intricate tapestry of government, quasi-government and private industry systems. Your proposal would require this entire system be dismantled and re-assembled with untold consequences for other commerce that needs to be transacted.

If financial institutions understand that they will be help totally liable for any monetary losses due to false or misleading statements or neglect to follow the above described check clearing and verification process the financial institutions will take measures to protect themselves from this type of loss, thus protecting the customer, the financial system, and reducing the criminal activity of producing counterfeit cashier’s checks.

Actually - financial institutions would simply stop accepting Cashier's Check for deposit - period. The ripple effect from that carries untold consequences.

Basically - we ARE working on getting the word out and making both front-line and customers aware of these dangers. However, this won't help your particular situation as we cannot go back in time and warn all involved. You were caught on the leading edge of this scam.

In reply to:

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Would any of these work?
Shawn

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I can tell you that there will be magic bullet that will stop this scam, or even effectively warn everyone. Things just don't happen in our society that quickly. Look at the issues that went on before 9/11 and some of the warning signs that were there. Look at the whole issue of Identity Theft. That crime has been around since at least 1994, and government, media, etc. is NOW finally addressing it.

You will need to keep doing what you are doing. Know that the members who frequent this forum have taken steps to educate front-line staff in their institutions. One of our tellers recently caught a fraudulent Cashier's Check before the customer deposited it. The word is spreading, but it won't happen overnight.

I, personally, have been trying to alert the government on the dangers of HMDA reporting and how easily a mortgage applicant's privacy and personal information can be compromised because of it. I also received a non-interested response. I will keep warning people about it, because I feel it could become a huge issue. Imagine anyone being able to find out your household income, and the race of you and your spouse all because you got a mortgage loan. The potential for Hate Crimes, and focused Identity Theft are there. Beginning in 2005, even more information will be available that could aid predatory lenders and other scam artists. Banks have no choice but to report this information. 20/20, etc. did not even return my e-mail.

It's a frustrating world. It seems good guys do not finish first. Please read the Security Section on this website as well as the Security forum. You will find out this fraud is but a small piece of all of the scams that are out there.

Shawn, we could do all of these things that you ask and are, in fact, doing some of these. Does it work? You tell me:

Customer is being victimized by the Canadian Lottery Scam. They have taken $200,000 from her to date. Her family refuses to declare her incompetent to manage her affairs. The Bank staff(who discovered the scam), the local police, the FBI, and the Secret Service have ALL tried to convince this customer that she is being ripped off. She thinks she's just gambling and that we are all overly concerned. There are those who might actually read the statement stuffers or lobby brochures and could be helped. They might actually watch the special programs on TV or read the warning in the newspaper. It could help some. Will it prevent this from happening? doubtful

I applaud your efforts at getting the word out about this particular scam. Our company is particularly sensitive to the Nigerian scams, since our internal audit department saved one of our customers from losing everything. The customer, incidentially, was not grateful but very angry that we interferred with his new business venture. There seems to be a strong "It can't happen to me - I'm too smart" feeling when it comes to this type of scam. There have been articles in our local newspapers. You can put the info out there but you can't generate interest or force people to read it.

Simply as a matter of curiosity, prior to being a victim of this scam, were you an ordinary customer who threw away all of your statement stuffers and didn't read the booklets at the teller window?

I doubt you will find any bank willing to use a security alert or notice crafted by anyone other than a government entity or well-known, established vendor (with a guaranty on the product). Compliance is a slippery slope. Even the slightest mis-step and we could risk damage to our bottom line and, even more importantly, our reputation. I am not saying that anything in a message designed by a third party would intentionally contain erroneous, misleading or inaccurate information. I am saying that we just couldn't take that chance because we are ultimately liable for everything we provide to our customers. (That's why we rely heavily on the government's "model" language for the simplest things like checking account disclosures and lobby notices.)

I just can't imagine that some local newspapers and TV stations haven't found these situations newsworthy. They will include a segment on Joe BigBucks but won't cover a local citizen who wants to warn others about active scams and frauds. There is really something wrong with that picture, isn't there?

Bonnie,
I truely thank you for going through the list of ideas I proposed, and showing me your views on them. Because I am a banking customer, not a banker, I guess I just did not see where some of these ideas would really be that hard to do. That is why I need to have the help of people like you to show me what can be done to better protect customers AND banks from this sort of scam.

I also thank you for contacting the FDIC on this matter. I feel like many times when I try to bring up the issue with any agency like this they just blow me off as a bitter customer and do not really listen to my ideas and concerns. My former bank has settled out of court with me, so getting the money back in no longer the issue, it is about protecting others before it is too late for them. Maybe I am just too close to the subject and that would be why I feel so strongly that something needs to be done right away. (or maybe it is my Irish temper)
Since I keep seeing more and more victims every day that is why I do not feel like any one is doing anything; I don't see any changes happening.

I guess when I was talking about full disclosure, I was talking about when the customer is there in the bank, not just in the paperwork that the customers do not read. Would it be a lot to ask that the tellers say that cashier's checks, like personal checks, are not verified as good and clear until they have completed the full clearing system?

>>Please review Reg CC. However, if you are able to get Reg CC revoked, you will have earned the gratitude of just about everyone on this forum!>>

Why don't bankers like Reg CC? Even if I read it I am not sure I would really understand it like all of you do, so can you put the good and bad of it into everyday English for me?

Like I said, I am a Mom who was a victim. When I look at the list I made it seems like suggestions that could work. I am glad to have the views of the people like you here to help me. I really think if we work together we can find some way to keep both the banks and the customers safe.

Besides message boards like this, how else are banks getting the word out about this scam?

Thanks,
Shawn

>>Simply as a matter of curiosity, prior to being a victim of this scam, were you an ordinary customer who threw away all of your statement stuffers and didn't read the booklets at the teller window? >>

I actually have every one of my statements back to 1995 (all from that same bank) but I get your point . . . no matter how many times we put it out there, the people who really need it may never see it. Maybe that is why I went out on the mission to change the laws so that it would be almost impossible for this scam to work so that every one would be protected, not just the ones who read the info.

Am I dreaming the impossible dream?

Shawn

>>I doubt you will find any bank willing to use a security alert or notice crafted by anyone other than a government entity or well-known, established vendor (with a guaranty on the product). >>

What if the bank posted thier own warnings and notices on their own websites? Then the bank's legal department can go over all of the wording and stuff first.

>>I just can't imagine that some local newspapers and TV stations haven't found these situations newsworthy. >>
We have gotten some local coverage, but once you do one station the others don't want to do the story. Every one wants to be first to break the news. We did a local TV and a local newspaper, CBS Evening News with Dan Rathers and Wired magazine. Next month we will be in Minnesota Law and Politics.

Shawn

I know I will regret adding anything to this already lengthy discussion, but --

I applaud the lady's desire to spread the word. I am amazed at how many scams there are, and the huge numbers of victims that succumb to them. Some of them (like the "pigeon drop") are older than Methuselah, but Barnum was right! There is one born every minute!

We educate our kids about the rules of the road, but there are always those who ignore their own mortality.

We educate them about the dangers of booze and tobacco and other drugs, yet there are those who ignore our hard-earned wisdom.

And we will warn people about advance fee scams and phony checks, and the "Canadian lottery," but there will always be those who think "I'm too smart for that" (and they aren't).

But don't give up, Shawn. We always need people who will advocate for a cause, no matter how frustratingly arduous the task. There will always be some who get the message.

In reply to:

---

Would it be a lot to ask that the tellers say that cashier's checks, like personal checks, are not verified as good and clear until they have completed the full clearing system?

---

This is where we get into the quasi-legal equivilent of hair-splitting. The fact is, a bonafide Cashier's Check IS good funds. You cannot place a stop payment on a Cashier's Check, nor can you return it as NSF. That is why Reg CC protects them like it does. The problem is that a counterfeit item is NOT a check, and therefore Reg CC technically doesn't apply to it. So what the teller NEEDS to say is that unless the customer has verified that the Cashier's Check is legitimate, we may not know it's a forgery for 5 to 7 days. If the customer has concerns that the check is a forgery, then they should contact the issuing bank (and I'll admit that with some of the larger banks this can be a daunting task), or send the item for collection (a long and sometimes expensive process) or wait 11 banking days just to be very sure.

In reply to:

---

Why don't bankers like Reg CC? Even if I read it I am not sure I would really understand it like all of you do, so can you put the good and bad of it into everyday English for me?

---

One of our regular members has stated he would rather have a root canal than try to figure out Reg CC. Without sounding too nerdish (I hope), do you remember an episode of Star Trek where Captain Kirk invented a card game to distract his captors? He kept inventing new rules as he went along to keep them confused. Well Reg CC can be a bit like a bad game of FizBin. There are times when you can hold an item 2 banking days, unless the item was deposited on the first Tuesday of the month following the first Monday after the full moon of a month ending in "Y." Okay - I exaggerate, but that's how convoluted some of the rules get.

In the Bankers Tools section are some attempts at plain English on Reg CC. You can look at one I submitted, although I must give the caveat that the hold days are more conservative (meaning in favor of giving availablility sooner) than some more aggresive interpretations of the Regulations for two situations: Treasury/Postal Money Order checks on an Exception Hold, and certain New Account holds.

Reg CC - Explanations

I also want to say "Thank you" for your willingness to understand our viewpoint on this issue. While we are not unsympathetic, there is only so much that we can do. So many times it seems that banks are in an adversarial relationship with the media and consumer groups. We are not all big, greedy impersonal institutions. However, I do not think you can point to an industry that manages to please everyone. In that regard, banks are no different than mechanics, retail stores, contractors, car dealers, public schools, phone companies, fast food chains, or any number of businesses that, for the most part, does a good job, but has plenty of detractors.

This afternoon our branches started to call me to tell me that they were receiving faxes we all know as the Nigerian Advance Scam. The last time we were flooded with these two of our customers fell for the scheme. I e-mailed a two page memo (as I did the last time we received these faxes) to all employees about the scam and what to look for in customers who may be taken in. I told them also to be particularly careful with persons who ask questions about when a check will "clear". I have asked all of my branch managers and head tellers to make sure every one reads and understands the memo. I do not know what else I can do to prevent another victim. The last time one customer did not ask any questions or mention anything of the scam. The other individual was warned repeatedly and managed to fall victim anyway.

Sean, I'm jumping in here at the last moment (and please ignore my hat, it's in regards to another post, I really do have a brain under that thing!)

I've worked as a teller and I can tell you that when bringing up the "send on collection" routine...People have absolute fits. I have never (and that is the honest to god truth) had a client say, "Oh thank you for protecting me, please send it on collection and take ten days too two weeks to get me the funds just to be safe." It's a nice theory, but unfortunately unrealistic.

I believe in caution, and as you can see, we do try but are tied down by regulations which don't always protect you or us. Hopefully we can work together to make things better in the future...but my 15 years in banking says, when we figure this one out, they'll find something else to scam us with.

I would like to suggest that you contact Consumer Counseling Services about this issue. While they may not do a whole heck of alot, they have the ability to tug the ears of people who might get the word out. Their primary services are to folks who have debt issues, but they do a variety of counseling on cash management and avoidence of scams which put people into difficult money positions in the first place.

With predatory lending being a hot topic, they're an agency folks listen to. A call from their national agency to CNN etc., might make a difference.

I do financial literacy conseling regularly. The folks I deal with are victims of deals like this due to language barriers and a lack of understanding of the financial world in general. That obviously wasn't the case for you, and in fact, if you hadn't had a good relationship with your bank prior to this, you probably would have had more difficulty with the item in the first place. Sometimes it dosen't pay to be a good guy

I like to think that if you'd ended up in my teller line I'd have saved you, but to be honest, if your balances were strong, you were a long time client, and you didn't indicate you were worried about the item being a forgery...I'd have given you credit for the relationship and not taken the extraordinary measure of sending the item out for collection. You were taken early in the scam. Now maybe I wouldn't be so gracious if I were behind the teller line...but 20/20 and all that!

Sorry you were hit hard! We do try to do what we can for our clients, we just can't solve it all unfortunately.

Shawn,
If you think banks should make a disclosure, let me show you what it might look like:

Depending on the type of account you have with this bank, you may have received a funds avilability disclosure when the account was opened. This disclosure indicates when we make funds from deposited items available to you for withdrawal. It has no effect on whether an item you deposited may be returned by the drawee bank. Any check may be returned by the drawee bank. Some possible reasons inculde forgery, insufficient funds, payment stopped and account closed. Some items, including cashiers and other types of official checks may be returned as counterfeit.

Any check which you deposit to this account which is returned unpaid will be debited back to the account even if it creates an overdraft. Each signatory on the account is liable for an overdraft created by a return check.

Only the bank on which a check is drawn can determine if a check is properly payable. A depositary bank cannot know or even estimate when an unpaid item would be returned - it may be days or, in some cases, years before the item is returned by the drawee bank. Thus it is exceptionally important that you know the person who issued or endorsed the check to you. If you have questions about a particular check, contact the bank on which it is drawn

You should be very grateful that the teller misinformed you. He or she made a mistake that merited a reprimand at best. Had the teller given you the explanation above and you been appreciative of the advice, the funds would have still been in the account when the check was returned and you would have been out exactly the same amount of money.

In reply to:

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you would have been out exactly the same amount of money

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But she's not, her former bank settled with her; so I have to agree with the Anon poster before you, the bank is the loser in this case and IMO they didn't do anything wrong under the circumstances.

Post deleted by John Burnett

Bonnie,
So would saying "Funds are available in 24 hours, but we recommend waiting 11 business days for the check to clear/be verified as good" a better wording?

Also, in your opinion, what is the safest way for a person to receive money? I know that the reason that all the victims I have spoken with have fallen for this is because they thought that cashier's checks were the safest way to go . . . they all thought it was as good as having cash in your hand.

Shawn

If you read the information on Shawn's website, you will see that she settled with her bank in December- long before this discussion took place. We do not know the results of the bank's internal investigation, nor do we know if the bank settled for the full amount of the check or met Shawn somewhere in the middle.

Yes, the bank is on the hook for the money, and it's a shame that anybody, be it the bank or Shawn or both, is stuck with a loss. But the reality is, this is not the first time a bank has paid the price for their employees' words, and it won't be the last time.

We'll never know if it was the bank's acceptance of some responsibility, fear of bad press, or realization that a loss in court was inevitable that drove them to reach settlement. And we really don't need to know.

Shawn came to us to offer valuable consumer insight on a topic we had already been discussiong without knowing her situation. While it is obvious that consumers benefit from awareness of scams, we as bankers also benefit in this case. I trust that more than one person has read this and thought 'I wonder what my tellers would have said.'

Some regular posters have offered opposing points of view, but have done so courteously, and with the backing of their own experiences and understanding of the regulations.

Yours in not the first anonymus post in this thread to walk the fine line between disagreement and personal attack. So I am publicly requesting that our resident BOL-breaker make it the last such post.

Mary Beth, could you please lock this thread? Thank you.

Jac, I have to complement you on your above analysis and your conviction to this situation. Although I don't agree with the outcome (and I hope I did it not as a personal attack but as I how felt under the circumstance), I do sympathize with the victims of these scams and I too believe that the key to resolving these situations is consumer education.

Shawn, if any of my comments were taken that way, I do apologize.

A check can be returned for up to one year in certain situations, so 11 days won't necessarily protect you against fraud.

The safest way to send money, in my opinion, is by wire transfer.

Dan,
I certainly do not think that you were engaging in a personal attack. Your comment would fall under the 'professional and courteous disagreement' category, IMHO.

My statement about personal attacks was directed to the anonymous posters who took the liberty of making gross assumptions about Shawn's character.

I must agree with Brenda, the safest way to do business with those you don't know is to request that the funds be wired to your bank. Guaranteed that the individual engaged in this scam would never have sent you the "$8,000" as a wire transfer as it would have meant funds out of his pocket instead of yours.

Thanks Jac.

I have noticed that several anon posts in this thread as well as some others I have read seem to have a familiar unfriendly ring to them. Could it be a former recipient of the V2 award?

For customer awareness:
I just found a 9 page booklet that I used for Senior Citizens
security seminars from my old bank, I can email it to interested parties.
It probably needs a some updating, though.

There were several Anonymous posts in this thread. Some were helpful. Some were in that "gray area." Two, I believe, became personal attacks on one of the contributors. I have deleted those posts, since they added nothing to the discussion. If we have no further positive contributions, the thread may be locked as suggested above.

Shawn,
It is my understanding that a check can be returned for faulty endorsement issues for as long as 3 years after it was negotiated. In some circumstances, this time period has been shortened to 1 year. However, if the person negotiating the check is the intended payee, this should not be an issue.

Reg CC and Reg J regulate the time period that a Payor Bank (the bank that is paying the check) has to return a forged or counterfeit check. Generally speaking the Payor bank must return the check by midnight of the banking day AFTER the banking day on which it receives the check.

I am not an expert on processing times for checks between non-local institutions. But generally speaking, depending on the local/non-local status of the Payor bank relative to the Depository Bank (the bank where the customer would deposit the check), I believe it can take up to five banking days for a check to go from the Depository Bank to the Payor Bank, and then another five banking days for the item to get back to the Depository Bank as a return. That is an extreme example, and more generally it takes 2 to 3 days with another 2 to 3 days for return. For local banks (banks that are in the same check processing region), it may be as quick as 1 to 2 days each way between banks. The easiest way to determine if the check you have is from a local or non-local bank is to ask your own bank. You can also look at the list of routing numbers in Appendix A of Reg CC. Within each Reserve District, there are check processing regions. Reg CC - Appendix A, Routing Number Guide

This is one reason why Reg CC allows for an 11 day hold in extreme circumstances. That would be 11 BANKING days which translates to just over two weeks time.

So you can wait after the 11 banking days, or you can also try contacting the Payor Bank to see if the item has been paid. When you call the Payor Bank and ask if the item has been paid, you should also ask if the item is still eligible to be returned.

This is more the case with a private party check than a Cashier's Check. A Payor Bank SHOULD know if the item in question was a legitimate check. What can happen with a private party check is - the check comes in through the check clearing system and is paid against the account. Later that day, a levy comes in to attach available money in the account. The levy (and any number of other legal enforcement actions or actions by the account holder) takes priority over any checks which must then be returned unpaid.

It is my understanding that after the deadline has passed for the Payor Bank to return the check, it must now pay the check. The only reason the Payor Bank may still be able to return the check is if the endorsement was forged (for instance, if you stole someone else's check and forged their name to cash or deposit it), or if there are other obvious alterations on the face of the check (example: You received a check for $40 and put in an extra "0" to make it $400 and then cashed or deposited it.)

Again - I am not an expert in all of the backroom processing for check clearings, so if someone else can clarify what I've written, please do so.

Shawn - final comment - I don't know if you want to soften the harsh language aimed at banks on your website. While we should be used to this as much as lawyers are, we still cringe when all of banking gets labled with the "Bad Banks" brush.

>>I have asked all of my branch managers and head tellers to make sure every one reads and understands the memo. I do not know what else I can do to prevent another victim>>

Just knowing that the scam is out there and making your tellers aware of what to look for may save several people, and for that I thank you. You are doing what you can and if we all just do a little it will make a huge difference in the long run.

Again, thank you for spreading the word!
Shawn

>>There are times when you can hold an item 2 banking days, unless the item was deposited on the first Tuesday of the month following the first Monday after the full moon of a month ending in "Y." Okay - I exaggerate, but that's how convoluted some of the rules get.>>

This is why I am not a banker . . . too many rules to remember!

I am really learning a lot from all of you.

Shawn

>> the bank is the loser in this case and IMO they didn't do anything wrong under the circumstances>>

Since you do not know all of the details behind why the bank settled with us, I do not think that you can say that they did not do anything wrong. There were many other factors involved in our case besides the information dealing with the counterfeit cashier's check, and because of the settlement agreement I cannot go into detail about them, but even without the cashier's check we would have had a very strong case against them.

Shawn

>>final comment - I don't know if you want to soften the harsh language aimed at banks on your website. >>

As you can imagine, I started the website in the middle of all of this unfolding, so yes I will agree, I do come down a little harsh on my bank. Until now I have not gotten anyone within the banking industry to talk to me about these scams or how the system works, or what can be done to improve the protection for all. After speaking with all of you that have helped me here, I am planning on updating some parts of my website.

I only work on emails and the website a few hours per day, so I will try to get to it soon.

Shawn

>>Had the teller given you the explanation above and you been appreciative of the advice, the funds would have still been in the account when the check was returned and you would have been out exactly the same amount of money. >>

Actually, no I would not have because of this line . . .

>>A depositary bank cannot know or even estimate when an unpaid item would be returned - it may be days or, in some cases, years before the item is returned by the drawee bank>>

This line would have caused me to not go through with the transaction at all. This is exactly the information that I, and a lot of the other victims, wanted from our bank.

My husband and I said that if there was any chance that this could come back at us, then we would not go through with the sale. This disclosure would have shown us that there would be that chance.

I have posted a poll to my message group asking the other victims if this disclosure would have made them handle things differently also.

I know that it is probably too much to think that banks would ever add this type of long detailed disclosure to their account information, or give it to customers who ask about funds available vs. check clearance, but as a customer and a victim I can say that this would have been all I needed to make a difference.

Shawn

Shawn - (and folks please forgive me for stretching this long thread out even further...)

One more word of caution that you should know if you are sharing information with other victims - and that is...
If the check is from Canada or any other foreign country, all bets are off. Reg CC and the check processing rules DO NOT apply to Canadian checks (which are most common) or any other foreign checks.

One of the problems with the Canadian Lottery Scam is the fraudsters will send a very official looking check which the victim deposits. The fraudsters even ADVISE the victim to wait 10 days or two weeks for the check to clear. Then the fraudster will contact the victim and tell them they need to wire $$$ to pay for the tax on the lottery winnings. Of course, right after they do that, the "Canadian" check comes back.

If you or any of your friends or victim group members receives a Canadian or other foreign check, they should have it sent for collection.

BTW - all of this is probably why more and more people are now using PayPal for auction payments. (NOTE - this is not an endorsement of PayPal but merely an observation.)