Jewish World Review Nov. 10, 2004 / 26 Mar-Cheshvan, 5765
By Jeff Gelles
http://www.jewishworldreview.com -- As the owner of a small business and a vacation property, Donna Thiel is familiar with various forms of payment and the risks each entails, from cash that may be counterfeit to credit cards that might be stolen or fake.
Checks, too, get their measure of caution. When someone sends Thiel a personal check to rent her home in the Poconos, she waits for it to clear before trusting that the money is truly in the bank.
But when a prospective renter sent her a $5,300 cashier's check earlier this month, Thiel wasn't especially on guard. Nor was she suspicious several days later, when the renter changed his mind and asked her to send a refund by cashier's check and Express Mail.
After all, her checking account showed the $5,300 as part of her available balance. Mostly she was impressed at the gentleman's graciousness. He'd even told her to keep 15 percent for her trouble, although he'd signed no contract requiring a cancellation fee.
Thiel wasn't worried, but she should have been. Were it not for the vigilance of customs officials and the Royal Canadian Mounted Police, she might be $4,500 in the hole, rather than breathing an uneasy sigh of relief.
Thiel was the victim of an old scam - a counterfeit cashier's check - that seems to be growing more frequent, according to David Barr, of the Federal Deposit Insurance Corp.
The FDIC and other banking agencies have warned for years of such scams. In the last two months, the FDIC has issued about 20 warnings identifying banks whose names have been used on the forgeries. Yesterday, two more joined the list: First Collinsville Bank, of Collinsville, Ill., and Poca Valley Bank, of Walton, W.Va.
To understand the stories underlying such alerts, consider what happened to Thiel, of Delaware County.
She and her husband, Raymond, list their vacation home on several Internet sites. Recently, one site appeared to have brought a rental: A man from Ireland said his company wanted the house for a month for him and several coworkers from Ireland and Canada.
A reasonable request, Thiel thought. She was comforted when he sent a cashier's check - seemingly issued by Bank of America - for the rental. So comforted that she let her guard down when he canceled and then requested a partial refund.
"If he would have sent me a regular check, I would have waited until it cleared," Thiel said. "But when I saw a cashier's check, I thought it was good as gold."
That's a common assumption, and a dangerous one.
"There's a conception out there that a cashier's check is as good as cash," Barr said. "People don't realize that with a computer, almost anybody can make a bogus cashier's check."
Nor should you assume you've waited long enough once your bank adds a deposit to your "available balance."
U.S. law and Federal Reserve regulations set maximum "hold" periods for checks. A local check, for example, can't be held more than two business days. A check drawn on a bank in a different check-processing territory can't be held more than five.
Although the process may be speeded up by Check 21, the new check-processing law that goes into effect next month, it can sometimes take twice that long for a check to actually clear - for the funds to be moved from the check writer's account to yours.
If the check winds up being returned as forged or fraudulent, and you've relied on the money, you could be in a serious mess as a result.
That's where Thiel was, after learning that the nice Irish businessman was an Internet fraudster.
Her credit union called with bad news: Her checking account was seriously overdrawn as a result of the loss, even after funds from another account had been moved to help cover it.
Thiel reported the crime to police, and tried to persuade the credit union to stop her refund check. Ironically, that posed a legal problem because of the special protections that cashier's checks - real ones - enjoy under state law, which limits a bank's flexibility unless a check is lost or stolen.
Thankfully, this is where the Mounties, with an assist from Canadian customs, rode to Thiel's rescue.
Telemarketing and Internet fraud have become so common that, six years ago, U.S. and Canadian officials set up Project COLT, a joint task force to investigate cross-border scams. One of their tactics is to monitor mail for clues that are red flags for fraud, such as a senior citizen's shaky handwriting.
Jean Rivest, the Mounties official who heads Project COLT, won't say what tipped officials off about the envelope bearing Thiel's $4,500. But the check was intercepted, and is being returned.
"It was just a lucky shot - a customs' officer was on the ball," Rivest said.
Dudley Do-Right couldn't have done better. But the best approach is to not assume any such check is real.