By now I hope you have heard about the check-cashing, money-wiring scam that has taken thousands of dollars from each of an untold number of victims. In this mystery shopper scam, the scammers send a check with instructions to cash it and wire part of the money to someone, usually in Canada.
The victim is told that they are evaluating the service of the wire service, or that they are to make some purchases to evaluate a retailer. A few weeks later, the victim learns that the check was a forgery, and they are responsible for repaying all of the money to their bank.
In the Hartford Courant, columnist George Gombossy asks if banks are actually aiding the mystery shopper scammers by omission. He has a good point. Although he is addressing the situation at one particular bank, the problem is not exclusive to that bank.
When someone takes one of these checks to the bank, they may ask how long before the check clears. Instead of giving the actual answer, that it may take weeks to know whether the check has been honored by the issuing bank, the teller may simply state when the funds will be available. However, that is a very different answer from when the check has cleared.
Under Federal law, banks must make funds available from U.S. Treasury checks, official bank checks (cashier’s checks, certified checks, and teller’s checks), and checks paid by government agencies at the opening of business the day after you deposit the check. For other checks, banks must similarly make the first $100 available the day after you deposit the check. Remaining funds must be made available on the second day after the deposit if payable by a local bank, and within five days if drawn on distant banks.
But here is the catch: It may take weeks for the check to get back to the issuing bank and for the bank or its customer to determine that the check is not valid.
Because most banking customers do not understand how this process works, they assume that when the bank gives them money for the check, that the check has cleared. In fact, that is the way it used to work, but the law has changed.
Want to help protect people from these scammers? Ask your bank how they answer the question of when customers know that a check they deposit has cleared. If they are instead telling customers when the funds will be available, write or call executives at the bank to demand that they improve their training and that they insist that tellers tell the truth.
The explanation does not have to be complicated. All they have to say is something along the lines of, “Under Federal law, we have to make the funds available to you within X business days. However, the check may not actually clear for several weeks. If the check is returned, you will be responsible for repaying any money you received.” How hard would that be? Especially considering that they could save their customers from being swindled out of thousands of dollars.
This scam is not limited to bogus mystery shopper jobs. It has been used by scammers who buy things through classified ads and online auctions.
Let’s do what we can to educate potential victims and stop the scammers in their tracks. What did your bank say when you asked them how long it takes to know that a check has cleared?