How Banks Make The Bogus Check Scam So Easy

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How Banks Make The Bogus Check Scam So Easy

(a post by a guy in 2006 but it well worded and explained and still relevant today)

It's been many years since we first heard about the now popular variation on the typical Nigerian 419 scam. It involved sending someone a large check, often after winning a big ticket item in an online auction. The check would be for much more than the winning bid, and the sender would make some excuse and simply ask the seller to send back the difference after the check cleared. This works because banks are required to clear checks quickly -- and most people assume that once a check "clears" that means it's valid. So they send off thousands of dollars, only to discover a few days later that the check was a fake. That means they not only don't have the money for whatever they sold, but they're also out the extra thousands they sent the scammer. The victims in such scams often are suspicious, but because many banks tell them the check is fine after it's cleared, they feel they're safe. In one case, a few years ago, we even wrote about a lawsuit between a bank and a scam victim over this issue. However, it's amazing that it's taken this long for people to start questioning why banks continue to tell people checks are okay after they've cleared -- and why they don't do more to protect people from such scams. The banks blame the law, noting that they're required to make the money available before they can actually verify the legitimacy of the check -- but it would seem like banks could do a much better job reminding people that the checks may not be legitimate even after they've cleared.

www.techdirt.com/articles/20060601/031244.shtml