PayPal or not
- From: PHildreth@xxxxxxx
- To: fptalk@xxxxxxxxxxxxx
- Date: Thu, 4 May 2006 06:45:58 EDT
All this talk about paypal vs. cashiers checks or money orders, etc. has
reminded me of problems with the paper versions.
Another benefit of paypal for sellers is the problem of scams with checks or
money orders. Someone mentioned a 10 day hold on personal checks - this
implies that they don't place a hold on cashier's checks or money orders.
People
think that cashier's checks or money orders are like cash. They are not. I
suppose they are like cash IF THEY ARE REAL. If they are counterfeit, they
aren't
"just like cash." I am the State Bank Commissioner in N.H. and I have seen a
couple scams that prey on people using checks of all kinds.
For example, someone sends you a postal money order and you deposit the money
order and send the pen off. Weeks later, you find out the postal money order
is counterfeit. A postal inspector told us it can take up to 2 months for a
postal money order to travel through the payment system. So, two months after
sending the pen, your bank may debit your account for the amount of the money
order!
I must admit that it is unlikely a scam artist is looking for fountain pens
but you never know.
The other payment system scam is used for larger online purchases. This
example happened in NH (the details such as the exact amount of money may be
off
but the story is true) . A woman sells a motorcycle online for $10,000. She
gets
a cashiers check for $17,000. The buyer says the extra $7,000 is his
commission and the transportation fee to send the cycle to Europe. He tells her
to use
Western Union to send him the funds. He claims to be in Texas. So, she checks
her account, sees she has $17,000 more in her account and, thinking the check
has "cleared", sends the money to the guy in Texas. The problem: the check
hasn't "cleared." Federal law requires the bank to make funds "available" to
the
depositor within a set number of days. So, weeks later, when the check comes
back to the bank as counterfeit, the bank debits the account for $17,000. If
there isn't enough in the account, the bank is within its rights to take legal
action to recover the money from the woman who "sold" her motorcycle (which
she still has!). I have seen this type of scam three times in New Hampshire and
I would not be surprised if there are many more.
Peter Hildreth
Other related posts:
