A money order scam involves a forged money order being passed off as genuine and being used to pay for goods or services.
It is usually drawn on an overseas bank so that it takes up to a few weeks
to verify if it is genuine.
In most of the cases of money order scams, the unsuspecting person is given more money than needed [in the form of money orders] to complete the purchase, and then asked to wire the excess money back.
By the time the owner of the forged money orders is advised by their bank that they are not genuine, they have already wired money to the scammer.
This scam works based on laws that require banks to make funds available on deposits in a short time, usually before the bank has the chance to determine if they are counterfeit.
The banks defend this practice, noting that the person who is in the best position to know if a particular transaction is suspect, or that a particular check may be forged, is the customer.
In the most common mail order scam, the person selling an item is sent
counterfeit money orders that add up to more than the cost of the item being
advertised. The scammer offers to 'trust you' and asks you to wire the
balance using a money transfer service.
The buyer then asks the seller to deduct the amount of the purchase from the total amount of the money order[s] and either wire the overpayment back to them, or the overpayment may be stated as shipping costs and the buyer is told to wire this to a shipping agent [either another scammer, or a separate business by the same scammer].
As an example, if you were selling a car for $10,000, the scammer might send
you $15,000 in money orders, and ask for the $5,000 to be wired to a shipper
because he lives overseas and has to transport the car to his country.
Often the scammer will say that they are overseas, but that a person living in the U.S. owes them $15,000 so they will get them to pay you because it is difficult getting money out of their own country to pay for the car.
The money orders will be fake, and so you will have lost the amount you wired.
The U.S. Postal Service advises that U.S. postal money orders have special security features, which can be seen by holding them in front of a light.
You should look for the following:
Domestic postal money orders never have a value of more than $1,000, and are distinguished by their green, yellow, and blue colors. Many counterfeit postal money orders have a face value of $750 to $950.
International postal money orders are printed in pink, yellow, and gold and cannot exceed $700. Postal inspectors say these counterfeit money orders usually have a face value of $500 to $700.
Check out some Internet sites [like this one on Craigslist] on how to avoid a money order scam.
To verify a postal money order, call the Money Order Verification System at 1-866-459-7822.
If you suspect fraud, call the U.S. Postal Inspection Service at 1-877-876-2455 [select option 4].
Complete the FTC online complaint form.
For additional information and resources on fraudulent money orders, call the Money Order Fraud Hot Line, run by the Inspection Service's Criminal Investigative Support Center, at (800) 372-8347
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