The Cheque Clearing Trap - Don't Get Caught!

By Jeff Burton

Scams morph to keep up with the times because that’s the nature of the beast. Fraudsters adapt to the latest trends and craft schemes built around them to draw in unsophisticated victims. So it was a surprise to read on the Chief Officers Network that there has been a rebirth of an old scam – become an agent for an international business – aimed at business people and private individuals who are looking to make a living or boost income. The only reason old scams are resurrected is because they work and it is worth the time and effort of “fraud engineers” to run a fraud flag up a pole and sit back to see who will salute it!

As you will see from the quoted article there are several criminal aspects to the resurgence of this scam but one particular area deserves special attention because it also encompasses the Nigerian Overpayment Scam and that concerns the process of depositing cheques and the wait time before those funds can be accessed.

In the better known Nigerian Overpayment Scam a buyer of an advertised item for sale sends the seller a cheque for more than the agreed purchase price and tries to persuade the seller to wire transfer the difference back to the buyer. In the meantime the buyers cheque gets deposited and after the receiving financial institution removed its “hold” the depositor takes this as meaning the cheque is good, which it is not, and draws upon the funds created by the cheque.

Here are some cold hard facts that should help recipients of these cheques avoid being embroiled in a fraud and losing money:

• When a bank/credit union removes a “hold” on a cheque that does NOT mean the cheque is legitimate – the length of a hold – often governed by cheque clearing agency rules – varies from institution to institution and is a risk management tool that balances the need for protecting the bank against fraud and avoiding unnecessarily hampering account holders, especially those of businesses, from accessing their funds

• Cheques that originate from overseas especially take weeks or months to clear but no matter how long it takes they will come back declared counterfeit
• No matter how much pressure victims get from the sender of the cheques to deposit them immediately and draw upon those funds quickly, victims should simply wait it out until the cheque has cleared before they can take the next steps
• Failure to recognize the difference between a “hold” and a return from the clearing can result in loss of funds (the face value of the cheque and the money sent back to the originator of the cheque), hassles with your bank and a potential criminal investigation involving a counterfeit item you have negotiated

Many of these job offers and solicitations to make money by becoming an agent for an overseas “marketing” business are impressive and well scripted but those considering getting involved need to look beyond the sound of easy money and educate themselves about these pitfalls. Failure to recognize the red flags on the surface can draw well meaning victims into cheque fraud, money-laundering and other potential criminal offences not to speak of a pile of stress coping with the consequences

Jeff Burton

Retired Detective, Vancouver Police Department

Burton Report

http://www.burton-report.com/