‘Lotteries’ send bogus cashier’s checks

Wednesday, November 08, 2006

Counterfeit cashier’s checks are arriving in mailboxes across the country luring victims to believe that they have won an international lottery.

What appears to be a real cashier’s check may not be worth the paper it’s printed on. Even banks have trouble telling the difference.

Here’s how the scam works: You receive a letter saying you’ve won $450,000 from a foreign lottery. But the letter says that before your winnings can be released, you must pay a clearance fee as required by federal or international law. Enclosed is a so-called cashier’s check for $4,800 to cover the tax along with instructions to where to wire the fee, which may total $1,000 or more.

You deposit the check into your personal account and, like a smart consumer, you wait to withdraw any money until the bank says the funds are available. Here is the problem: The bank, under U.S. check clearing laws, must make the funds from any cashier’s check available after a short period—before the bank knows whether the check is legitimate.

Many consumers have done due diligence and called a phone number on the check purporting to belong to the issuing bank. That’s part of the scam: one of the scammers answers the line and assures the potential victim that the check is valid.

Most consumers who are told by a bank that the money is “available” assume the check is good and that the winnings are legitimate. But unfortunately, after they have withdrawn money and wired it off to pay the so-called clearance fee, the victims find out that the check is bogus. And to add insult to injury, the victim is liable for the money they wired plus any outstanding fees for depositing a bad check.

“It’s easy to think a cashier’s check is as good as cash in your hand,” warns Janice Garrett, head of the Consumer Protection division of the Northwestern District Attorney’s office in Massachusetts, just one of the consumer protection agencies seeing a spike in this scam.

A similar scam is played on people who are selling items through classified ads. The buyers send the seller fake cashier’s checks (or bogus money orders) for more than the item’s value, saying that they sent extra money for shipping. The buyers ask the seller to wire the extra cash to the “shipper.”

Even sellers who prudently wait for the check to clear can fall for this because the bank accepts their check and they are given access to the funds. Only later do they find out that the check has bounced and they are out for the cash they gave the so-called shipper.

Do you have a scam to report? The website editor would like to hear about it. Click here to e-mail the Editor.