I have a question about the scam where potential “buyers” contact people about horses for sale, say they’ll send a cashiers check and send a shipper after the check clears. If the check has cleared, what is the scam? It used to be that the checks were fake and would be for over the amount of the horse, and they would ask the seller to use the extra to pay the shipper. They would ask to send a shipper right away before the check would have a chance to clear. People who fell for it lost their horse, the cash they gave to the shipper, and then would also get no money from the fake check. If the scammers are really waiting until the checks clear now, how does the scam work?
It’s a cashier’s check and usually written for over the amount of purchase which they will refund to you as a thanks.
Sometimes they take the check and “wash” the amount off and put in a new one. There are several zillion versions of this and unfortunately, even though there are posts about this sort of thing regularly, someone always falls for it.
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The check hasn’t cleared. The seller just thinks that it has because his/her bank is paying on it. SHOCK.
Banks pay out on checks based on policy, not actual ACH clearing. Their policy is based on having a high percentage of checks that clear successfully after so many days. BUT, if a check is one of the unfortunate few that does bounce, AFTER the bank paid on it, the bank sucks that money back out of the unknowing, trusting customer’s account. That is how banks have always done it.
And - cashier’s checks can bounce. Yep! The fraudster capitalizes on the widespread belief that cashier’s checks and cash are the same thing. They are not.
Most people have no understanding of the complex ACH bank clearing system - not even a glimmer. Note to the wise: Most bank tellers and lower-level customer-facing bank employees haven’t got a clue about it, either.
Everybody tells each other what they think happens. The way it would logically make sense to them. That’s not even close to how it works, or to how banks use it.
The fraudster picks particular banks that are slow processing items through the banking system (used to be, maybe still is, smaller local rural banks). They have their ways of opening an account, taking out the cashier’s check and somehow withdrawing the funds behind it at almost the same time. They then push through their deal fast. The seller accepts the cashier’s check and takes it to their own bank, deposits it and withdraws the cash overage, and pays the pick-up driver the overage as requested. Then the cashier’s check bounces and the bank charges the customer’s account for that amount, and the horse (or furniture or antique or equipment or whatever) is long gone. This is not a happy moment for anyone except the fraudster.
That’s how it works. If I could find the old article describing it I’d link it. 
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Thank you! I know it’s a scam and has been around forever, but didn’t know about the clearing process. Makes sense. Thanks again!
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The information about the clearing process is spot-on.
A variation on this scheme is certified checks. They can be falsified, too. And postal money orders, cashiers checks, etc.
If you’re not going to take greenbacks then I suggest electronic fund transfers. Maybe there’s a way to break these, too, but I’ve used them for years and they work. Buyers occasionally balk at the cost ($15-$35, depending on the bank). If that’s an issue I cut the selling price by the cost of the EFT. I don’t get the horse of of the stall until the bank notifies me that the funds are there. Pretty much an iron-clad rule.
Thieves steal. It’s what they do. Cover your six in a way that at least you can chase the bank if somethings goes sideways.
G.
P.S. Hundred dollar bills are the most counterfeited currency in the world, or so I’m told.
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Even banks get burned by a variant of this scam.
Someone arrives in town with a bank check, and uses it to open an account in a local bank.
After n days (n being bank policy) the account owner can make cash withdrawals, even though the bank check has not yet fully cleared the system.
By the time the bank discovers that the “bank check” isn’t going to clear, the money is gone, and the perpetrator can’t be found.
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They have their ways of opening an account, taking out the cashier’s check and somehow withdrawing the funds behind it at almost the same time.
my guess is the cashiers check is altered to an amount much greater than issued … check issued at $50 becomes $50,000. All then need is a bank who does not use a check protector system on the issued check
If you have a Paypal account, that is a safe way to transfer funds from all over the world. I had a goodly sum transferred into my account from Australia recently. The fee was very reasonable.
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PayPal is NOT safe and I would never use it for large scale transactions. People will fall for phishing scams using spoofed email addresses that look official from PayPal asking to state credit card or bank information. Safest ways to make a large purchases: cash in hand, direct wire transfer from bank to bank ( if youre present in person at the time of the transfer even better), or a trusted escrow.
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I have had enough EFT/ bank wires messed up that I won’t use them anymore.
a lot of smaller banks have an intermediary “clearing” bank so you are basically wiring money and then hoping it ends up in the seller’s account. I have had to call the sellers bank and get them to go look for a transfer because they have no way of knowing it’s even out there unless they’re notified. It’s an antiquated system and I usually send the seller a bank letter showing proof of funds and a bank check.
Gosh, I don’t remember the exact details now, but I seem to recall a thread (maybe on the SH Breeding forum?) within the last several years in which a buyer purchasing a horse overseas had emails intercepted - the hackers changed the receiving (seller’s) account numbers to their own. I think they were able to stop the transfer in time (or maybe just recover the money).
Well, this thread has been an education. I had no idea about some of these things, even PayPal. Thanks!
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EFT’s are being falsified in real estate. The scammer hijacks an email account and sends new routing/account instructions. Seller beware.
A I understand the system if you contract with your bank to send money by EFT to another bank and it’s get “hijacked” then you get your money back. It’s no different than if somebody steals your checkbook and forges your signature on the checks. Or if a dishonest teller makes an unauthorized cash withdrawal from your account. I’m not sure this is true on all forms of electronic payments, particularly debit cards. I don’t use a debit card because the last time I looked at the rules (a couple of years back) my liability for unlawful use of my information by another (gleaned from some sort of “hacking device” in an ATM machine) was much higher than my liability for a credit card based loss under the same circumstances.
I’m not a banking expert and I may be in error. Rules may have changed since I last looked at them. But it still seems to be the case that EFT is the safest way to send money to another.
G.
When I was doing import/export work our bank sent the funds to client’s bank by use of a correspondence bank near to or who had a relationship with the client’s bank … the funds were inter-bank transfers between known parties… of course we had their gold reserves in NYC to attach if things got screwy.
wire transfers work just as well, $10 is the usual fee… I have a client in China and that is how I am paid… I have a transfer account that I keep just a few dollars in that all transfers are routed to, I get an automatic text message of the arrival (or any account activity) , then transfer the money from that account
If it gets hijacked, yes, if the two banks can’t coordiante to find it and each blames the other - no.
Had this happen three times now where the clearing bank just couldn’t locate the transfer.
It is shocking and amazing how often this happens - that one bank can’t locate their side of a transfer; or conversely, that a bank receives money they can’t identify and credit to a customer account.
One would think the banking system would be universal and consistent. It is not.
So did this get resolved?
I agree that it’s not perfect. But if you have at least one side of the transfer and it’s an institution at least you have one person to sue for any losses. With counterfeit items and other scams you often have no one to sue as the bad guys are “in the wind.”
So when I say “safest” I mean that in comparison to other systems.
G.
