Are Cashier's Checks Safe?
Banking Law / Corporate & Business Law on February 16, 2012
In a world where a seller must be careful about taking cash (because of the obligation to report cash transactions in excess of $10,000.00) and personal checks (which can bounce or be stopped), a cashier’s check was always considered a relatively easy and safe alternative. A cashier’s check is drawn on a financial institution directly, so a seller does not have to worry whether the person giving the check has sufficient funds in an account to make it good. Unfortunately, the world has now learned that cashier’s checks are not the sure thing they once were. Banks and title companies have begun issuing warnings about the strong increase in the use of counterfeit cashier’s checks. Before you accept payment by cashier’s check keep in mind these simple things:
- Know your buyer. Is the person previously known to you? Is he or she local? Have they provided you with a working phone number and a physical home or business address?
- Examine the financial instrument. Is it similar to cashier’s checks you’ve seen in the past? Are you familiar with the financial institutions, and if so, was it issued at a local branch? Does the bank information look complete and correct? Is any of the information on the check spelled incorrectly? Does anything about the check look suspicious to you?
- Accept only checks made payable to you. Do not allow the purchaser to sign over an instrument payable to the buyer to any other third party.
- Verify the check. Do not treat the check as cash until you obtain confirmation from the bank that the check the check is authentic. Keep in mind that many larger financial institutions cannot verify checks on the same day of issuance, making on the spot verification impossible.
- When in doubt-just say no. If it seems too good to be true, it probably is!
Grey Squires-Binford is a partner at Killgore, Pearlman, Stamp, Ornstein & Squires, P.A. Her practice areas covers a wide array of commercial disputes including construction defects, banking litigation, real property and broker disputes, noncompete and trade secret litigation, commercial collections, bankruptcy and creditor’s rights. Mrs. Squires-Binford is certified as a mediator (since 1994) and as an arbitrator (since 1996).