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Home >> Scams/Fraud
First They Said It's Good, Then They Said It's Bad
I deposited a check from an out-of-state bank written to another person. The bank put a hold on it for ten days but after three days said it was good; therefore I began drawing money out of my account. Later, the bank told me it was a fraudulent check. Who is responsible for the money?
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 We don't have a lot of facts here, but there are some similar scams that are growing. Some even include the use of cashier's checks to commit this fraud. The problem is that banks are often required by regulation to make funds available to a customer before that check has actually cleared. This is especially so when the check is from a different state or country. It could take weeks to realize that the check was fraudulent.
When this becomes known, the transaction reverses through the steps like rewinding a movie. When that check gets to your bank, they'll ask you for the money. Then it is your turn to go to that other person who gave it to you.
A question to ask is, "why should the bank take a loss, they didn't benefit from the check, you did." The bank shouldn't have to absorb the loss, but they may arrange for payments with you, if the amount is substantial.
Published on BankingQuestions.com 1/10/07
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