I hope that all of you will help me in my New Year's Resolution . . . to increase the awareness of scams! I have written the following letter to sum things up . . .
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My name is Shawn Mosch, and I operate the website http://www.ScamVictimsUnited.com
I am hoping that we could work together on a subject that I feel very strongly about, and is the reason that my husband and I started our website.
To give you a brief history, my husband and I became the victims of a Counterfeit Cashier's Check Scam in the fall of 2002. If you want to read the entire story in detail, you can do so at http://scamvictimsunited.com/our_story.htm
. The financial and emotional nightmare that we went through due to this scam motivated us to start a website to warn others about this scam, and create a safe support group type place for victims to share their stories. It was very rewarding to have other people contact us and tell us that because they saw our website they realized that the situation that they were in was a scam, and they did not send the money to the scammer, so we saved them from becoming victims. At first, I tracked the names each person who was saved by seeing our site along with how much money they would have lost to the scam. When the total amount hit over $2 million before our site was 2 years old, I was not able to keep up with tracking the numbers.
While there are many different scams out there that we talk about on our site, a large number of them come back to one thing . . . counterfeit cashier's checks. This was one of the main issues of my presentation at the NCVC's conference in June. If there were stronger policies and procedures in relation to cashier's checks, many of these scams could be eliminated. Also, there is much confusion by the general public as to what some of the banking terms really mean, and this is really why the scam works so well. The scammers send you a check, possibly for payment for an item they are buying from you online or as a deposit on a room they are planning to rent from you. But then something happens and they either have to back out of the deal, or the check was for more than the amount that you were selling the item for. The scammers apologizes for the problem and since you have already deposited the check into your account, asks you to wait for the check to clear, and then wire the money to them. This is where the unclear banking terms come into play. My friend, Annie McGuire of Fraudaid.com sums it up very well on her site when she breaks down the definition of commonly used banking terms, and has allowed me to use that information from her site.
What "Clear" really means: "The check has cleared" does not mean the money in your account belongs to you. It only means that the clearing house has not sent the draft back for non-sufficient funds, closed account, or flag instructions on the account. It does not mean the draft was written by the account holder.
Depending on the size or purpose of the account, the account holder may not notice the absence of funds for several days after the draft has reached his bank. In fact, an account holder may have up to one full year to report an unauthorized draft.
Bank statements are usually sent out on the 1st or 15th of the month. If the transaction took place near one of those dates, the account holder may be unaware of the unauthorized transaction until statements are sent out the following month and time is taken to balance the statement. - Fraudaid.com
The problem with this is that when the average bank customer hears that a check is "clear" they think that it means that the check is good and that they can now use the money with no concerns that there is anything wrong with the check or the account.
What "Available funds" really means: "Available funds" does not mean the money in your account belongs to you, even if a hold has been taken off the draft.
When you deposit a check into your bank account, your bank advances you the money for that check to keep the wheels of commerce moving. Of the millions and millions of checks processed every day, a relatively small number are returned because of a problem; because of this, banks and credit unions must automatically credit depositor accounts within a certain number of days.
A bank or credit union can make an exception to the rule and wait for a longer period of time on any given deposit before crediting the depositor account, but apart from such an exception the credit is automatic.
This credit to your account is called a "provisional loan" and is actually a no-signature loan from your bank to you. It does not mean that your bank has been credited by the account holder bank. - Fraudaid.com
Again, when the average banking customer hears the terms "funds available" they feel safe that the check is good and that they can proceed with using the money with no concerns about liability, but this is not the case.
Another banking term that is used a lot is "verified as good". When I brought the cashier's check that we received in 2002 into the bank and asked them how long I would have to wait to be sure that this check was good, they told me that "the check would be verified as good in 24 hours". I assumed that this meant that there was a computer system, or at very least a person who would call, and actually VERIFY that the check is a good, legitimate check that could be honored. This is not the case. When the bank told me that the check was "verified as good" it was just their way of saying that the "funds were available".
The only time the money in your account really belongs to you is when the check or money order has been HONORED, meaning your bank has been credited (paid) by the account holder bank.
ALWAYS ask your bank if the draft has been honored and DO NOT TOUCH THE MONEY until it has.
When in doubt about a draft, tell your bank to send the draft for COLLECTION. - Fraudaid.com
The problem with this is that most banking customers do not know this information until it is too late. This is why we at ScamVictimsUnited.com would like to see more information to inform customers on what these banking terms really mean, and encourage the use of clearer, more understandable terminology. We feel that the terms "funds pending" would be a better way to let customers know that the money is in their account, but the check has not yet been honored. Also, the banks could further clarify things by telling customers who are asking about the status of a check that it "has cleared but has not been honored" when the bank has not yet been credited by the account holder's bank.
Over the years, I have spoken with members of the banking industry, and I have asked if a law that would put a hold on all the release of any of the funds from a cashier's check for a 7 to 10 days would reduce the number of cases of these scam situations, and many of them agree that it would. I know that personally, in the case of our scam, such a hold would have saved us from becoming victims. The problem that people in the banking industry see with such a hold is that customers will become upset that they cannot access their money. For that, I suggest that if someone demands that the money is released in 24 hours, that they will have to sign a release that says that they acknowledge that they are taking this money from the account before the check has been honored, and that they are completely liable for the money. In a case like this, people who KNOW the person that they got the check from will be able to access the money, but people who do not know the sender of the check would think twice about the situation that they are entering into.
This is why I feel that a change in banking laws, requiring banks to use more understandable terminology, along with the existence of an effective education and awareness program would assist to reduce the number of scams and save thousands of Americans from the financial and emotional trauma that so many other victims have gone through. It is my hope that you will join us in this movement with the resources you have to bring these dreams into reality.
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I plan on sending this letter to contacts I made when I presented at the NCVC's annual conference in June of 2007. I am also going to send this to my state representatives.
I am encouraging all of you to also send this letter to your state representatives also.
(you can adjust the first line so that it reflects you, or add your own personal story with the scam)
To make it easy for all of you, here is a link and you just enter your zip code and it gives you your representatives information.
Let's see if we can get ourselves heard!