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fraudEven as more and more businesses are rejecting the option of checks as a form of payment, in 2013 check fraud was still the number one form of fraud according to the National Consumers League. Nearly 25% of all the fraud and scam reports that the NCL received in 2013 were related to check fraud – nearly all following the pattern of asking sellers to refund a supposed ‘accidental’ overpayment. To avoid becoming another statistic in another fraud report, follow the simple steps below to protect yourself.
Protect Your Funds
When buying or selling with an unfamiliar second party you have to protect yourself first and foremost. The easiest way to do so is through the use of an online escrow company. Online escrow companies like PaySAFE simply act as a neutral third party to verify and hold purchase funds. Sellers are protected as all funds are verified upfront and out of the buyer’s wallet – completely removing the risk of fraudulent checks, non-payment, insufficient funds or credit card chargebacks. Buyers are protected as well as funds are released to the seller until there’s proof of shipping, or the item has arrived for a final inspection.
Be Leery of Overpayment
The most common check fraud scenario involves an ‘accidental’ overpayment on the part of the buyer. The buyer then asks that you wire them the overage via MoneyGram or another money transmitter. In the meantime, your bank is still verifying the buyer’s funds only to find out that there is no money in the checking account it’s attempting to draw from. Now you’re out whatever money was wired back for the overage and have also likely shipped original the item(s) up for sale.
Wait for Checks to Clear
If a buyer insists on paying by check, be sure to let them know that you’ll be waiting for the funds to clear before sending the items you’re selling. While the deposited check amount may show as “available” soon after you get it to the bank, this is simply money front to you by the bank while their team works to verify the check itself. Checks in an amount of under $5,000 generally take a day or two to be verified, whereas checks over $5,000 have a longer holding period and can take up to a week to completely clear into your account.
When all is said and done, the risk of being defrauded by check comes down to using some good ol’ common sense. Why would someone offer to pay more than the asking price of an item if it’s not being sold in an auction setting? Why would they simply not tear up the check for an incorrect amount and rewrite another? Often times when something seems to good to be true, it is.
For more information about protecting yourself from fraud and scams see our posts on 9 ways to protect yourself from internet fraud, how to avoid being a victim of escrow fraud, and how to pay for items on ebay.

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