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How to Protect Yourself from Fake Cashier’s Checks and Money Order Scams

by : Stan Jaslar

When you run a financial institution, you inevitably hear about money order and cashier’s checks scams, and eventually, some of your customers may fall prey to these scams.

Theoretically, your customers are responsible for losses related to fraudulent money orders and cashier’s checks, but if they deposit a fake check and make withdrawals against that amount, they may not be able to bring their account back into the black when they realize the check is no good, and that puts you at risk of suffering a loss.

To protect your bank, credit union of other financial institution from fraudulent cashier’s checks and money orders, you need to be vigilant.

1. Have Tellers Ask Questions When Customers Deposit Cashier’s Checks

If one of your customers has become the unwitting victim of a scam, your tellers may be able to stop the issue from escalating simply by asking the right questions. Encourage tellers to ask the following questions when accepting deposits from customers, especially deposits of cashier’s checks or money orders:

  1. Do you know the person who gave you this cashier’s check or money order?
  2. Do you trust the person who gave you this cashier’s check or money order?
  3. Have you met the individual in person, or do you only communicate electronically?
  4. If using electronic communication, do you notice a lot of issues with grammar or odd phrasing?
  5. Did the individual who gave you the cashier’s check or money order request change in cash or from a wire transfer?

The wrong answers to those questions can be serious signs of fraud. Additionally, have your tellers remind customers that although funds from cashier’s checks and money orders are available right away, that does not mean these deposits have cleared. Let your customers know how long it can take to figure out a money order is fraudulent and advise them that they may want to delay spending the funds until they are absolutely sure the deposit is valid.

2. Know the Signs of Fake Money Orders and Fraudulent Cashier’s Checks

Your tellers should also be aware of telltale signs that a money order or cashier’s check is fraudulent. With cashier’s checks, they should look for the bank name and phone number. The absence of a name or phone number is a red flag, but in some cases, scam artists include a real bank’s details. If your tellers are suspicious, they can contact the bank directly.

Additionally, most cashier’s checks have the recipient’s name professionally printed on the check. Handwritten names can be another sign of a fake.

Money orders are usually embedded with a classic security feature such as a watermark, color shifting ink, or heat-sensitive patches. Consider putting together a cheat sheet of the current security marks used by companies such as MoneyGram or Ben Franklin that issue money orders.

3. Use Real-Time Fraud Analysis Tools

In a lot of cases, your customers simply deposit funds into the automatic teller machine (ATM), and your tellers don’t get a chance to talk with them personally. To protect your customers and your financial institution from fraud, you need fraud analysis tools that can look for potential fraud in real time.

You need tools that can find inconsistencies with ATM withdrawals and deposits and notice when transactions exceed a customer’s usual spending profile. Ideally, these tools should alert you to the situation so that you can reach out to your customers as needed.

4. Check for Alerts from the Office of the Comptroller

A lot of scam artists use info from real banks, and the Office of the Comptroller of Currency publishes alerts on which bank’s names are commonly being leveraged in scams. For instance, in March 2019, scam artists were using fake cashier’s checks sporting the name of the First National Bank of Elmer, NJ, and in May 2019, thieves were issuing counterfeit cashier’s checks from Farmers & Merchants National Bank in Nashville, IL.

Usually, scam artists choose to copy information from relatively small banks because they believe they are less likely to get detected by taking this route. Check regularly for updated information or sign up for alerts from the Department of the Treasury.

5. Educate Your Customers

Customer education can be one of your most effective lines of defense against fake money orders or cashier’s checks. Consider using signs, direct mail pieces, inserts in mailed statements, and emails to tell your customers about the risk of scams.

Let customers know about the most common fraudulent cashier’s checks and money order scams, and share the following tips so they can protect themselves:

  • Be suspicious of offers from strangers — if it sounds too good to be true, it probably is.
  • Don’t accept international money orders.
  • If someone wants to pay with a cashier’s check or money order, consider asking for an alternative form of verified payment such as a wire transfer, an electronic funds transfer, or cash.
  • If they insist on a cashier’s check or money order, accompany them to the bank or store, and watch a professional issue the payment.
  • Never accept cashier’s checks or money orders over the sale amount.
  • Be weary of “buyers” who don’t seem interested in the product — they don’t ask questions or want to see it, but they offer to buy it quickly.
  • Do not send cash or wire money to anyone (especially strangers) in return for a cashier’s check or money order.

If your customers follow that advice, you reduce your risk of exposure to scams involving fake money orders or cashier’s checks.

At SQN Banking Systems, we make fraud protection easy for our clients. To learn more about our products and services, contact us today. We look forward to helping you find the tools that can minimize your losses, while saving you time, safeguarding your reputation, and helping your financial institution rise to the next level of success.

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