Are Cashiers Checks Safe? What You Need to Know

Cashier’s checks are generally considered a secure form of payment because they are guaranteed by the issuing bank. However, this perceived security also makes them a target for fraudsters. Understanding the mechanics of these checks and common scams is important for anyone conducting financial transactions.

What is a Cashier’s Check

A cashier’s check is a payment instrument drawn on the bank’s own funds, not directly from a customer’s personal account. The bank itself guarantees the payment. When a customer requests a cashier’s check, the bank debits the specified amount from the customer’s account or accepts cash.

The bank then issues the check, listing itself as the drawer and signing it through a bank officer or teller. The check includes the name of the payee. This process ensures the funds are available and committed by the bank, providing assurance to the recipient that the check will not bounce.

Cashier’s checks are commonly used for large transactions where guaranteed funds are necessary, such as real estate deposits or vehicle purchases. Obtaining one usually incurs a fee, typically ranging from $5 to $15, depending on the financial institution. Some banks might waive this fee for premium accounts.

Recognizing Common Scams

Despite their security features, cashier’s checks are exploited in fraudulent schemes, primarily due to delayed check clearing and perceived trustworthiness. Scammers create highly convincing counterfeit checks that can be difficult to distinguish from genuine ones, even for bank employees. These fake checks often incorporate legitimate bank names and routing numbers.

One prevalent scam involves counterfeit cashier’s checks used in overpayment schemes. A scammer, often posing as a buyer, sends a check for an amount greater than the agreed-upon price. The scammer then fabricates an excuse for the overpayment and instructs the recipient to deposit the check and wire back the excess funds.

Another variation includes fake lottery winnings or inheritance scams, where a fraudulent check is sent with instructions to deposit it and then wire a portion back to cover “taxes” or “fees.” These scams rely on banks making deposited funds available quickly, often within one business day. However, “funds available” does not mean the check has fully cleared; it can take days or even weeks for a counterfeit check to be identified. When the fake check eventually bounces, the recipient is responsible for the entire amount, including any money already wired.

Protecting Yourself

To protect yourself from cashier’s check fraud, verify the check’s legitimacy directly with the issuing bank. Independently find the bank’s official contact information, such as through their public website or a trusted directory, rather than using any phone number provided on the check. When contacting the bank, provide details like the check number, amount, and date of issuance to confirm its authenticity and that funds are truly available.

Never release goods, provide services, or send any money back to the payer until the cashier’s check has fully cleared. While funds may become available quickly, this does not guarantee the check is genuine. It can take several business days, or even weeks, for a bank to discover a counterfeit check and reverse the deposit. Your bank will hold you responsible for any funds withdrawn from a fraudulent check deposited into your account.

Be alert to common red flags that often accompany cashier’s check scams. These include receiving a check for an amount greater than the agreed-upon price, pressure to act quickly or immediately wire back funds, and unusual circumstances, particularly if the sender is unknown or reluctant to meet in person. Poor grammar or spelling in communications can also indicate a fraudulent scheme. If an offer seems too good to be true, it likely is.