Good article - why so many Cashier's check scams.

Discussion in 'Stolen Radios, Scams and Rip-Offs' started by K7JOE, Aug 22, 2019.

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  1. K7JOE

    K7JOE Ham Member QRZ Page

    I suspected that some sort of technological change had happened over the past 10 years that made cashier’s checks easier for scammers to manufacture. Maybe the printers became cheaper? Ink became easier to replicate? Instead, I found that a few federal laws are responsible for failing to contain the potentially disastrous mess of our shared online world.

    In August 1987, Congress voted the Expedited Funds Availability Act into effect. This regulation requires that banks give customers their money from cashed checks after a certain amount of time; for most cashier’s checks these days, this means funds must be available within 24 hours. In effect, this act is a compromise between security and convenience, and gives banks less than a day to verify a check. Banks are also obligated to put most checks through a weeks-long clearing process. Together, these rules put banks in a double bind — they have to get customers the money before they’ve verified the checks.

    Congress has tried to make check cashing more up-to-date. On October 28, 2003, they signed the Check Clearing for the 21st Century Act into law. It was supposed to help banks handle electronic checks more efficiently and allowed the kind of check deposit technology that Mitek Systems provides. However, it hasn’t eliminated the gap between when a bank customer gets the funds from a cashier’s check and when the bank verifies the check is real.
    Last edited: Aug 22, 2019
  2. KB2SUJ

    KB2SUJ Ham Member QRZ Page

    Requiring expediency is not surprising. Back in the old days of having to physically read, scan and then transport the checks to the paying bank was an arduous task. Now, the depositing bank electronically scans checks (of which there are far fewer than there was 20 years ago) and simply send the data to the fed who then re-transmits it to the payer bank. This can be done in under 24 hours with no human intervention where as before, it could take a week to process. The time issue is to allow the payer bank a chance to pay or refuse the instrument. They have a minimum wage clerk doing this in what is basically a warehouse.. The customer (if the instrument is questionable) must be contacted and verified. This can take three business days. It used to be the payers local branch handled it, the platform people knew the customers and knew where to reach them. Not any more.
    So what happens (just like gun background checks) is if the payer does not respond quickly to reverse (yes, the instrument is paid immediately upon presentation and reversed if it 'bounces) the charge, the submitting bank can be stuck if the clearing time passes and the funds made available for withdraw. They of course go after the depositing customer.
    If you make a large transaction, use EFT or a wire. If you get over paid, delay sending the over payment until you are positive the funds truly cleared. You can often contact the payer bank and verify the check is valid and the funds available to pay. Some will even put a hold on the funds to ensure the check is paid.

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