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Cashier's Checks

Not the Same as Cash

  • Don’t assume a Cashier’s Check is valid
  • Stolen & counterfeit Cashier’s Checks are NOT valid
  • Don’t assume that because the bank accepts the Cashier’s Check that is it valid
  • You cannot afford to make assumptions about the validity of a cashier's check! Gone are the days when an item bearing the words "Cashier's Check" could be treated the same as cash. Too many counterfeit and missing items are lurking out there, ready to cause losses to unsuspecting individuals, businesses and financial institutions who fail to take adequate precautions. A thousand cashier's checks were stolen while in transit from the check printer to a bank; the FDIC believes circulation of these stolen documents may be widespread. The routing number on counterfeit items may reflect a bank other than the bank name on the check. Counterfeit loan disbursement checks also have been spotted.
  • Take precautions. If you have any questions about the validity of a Cashier’s Check, you can contact your bank or call the bank that appears to have issued the item. Verify its validity by giving them complete information -- payee, date, amount, and item number. Make note of who you spoke to and when. DO NOT utilize a phone number written on the check (in case it is a false number). Find the bank's telephone number in a reliable source, such as a bank directory, or on the bank's Web site.
  • Although banks occasionally do stop the deposit of a fraudulent cashier’s check and subsequently save their customer thousands of dollars, banks are not responsible for your losses as a result of stolen or counterfeit checks. Whether it’s a Lotto scam, office equipment scam, Yellow Pages invoice scam or other creative ways for thieves and con artists to steal your money and wreak financial havoc, you are the first line of defense. You must know your customer, question propositions that are “get rich quick” or “too good to be true”, establish a system of “checks and balances” and ensure that anyone handling checks is continually educated about the various counterfeit and fraudulent activities that may adversely affect your business.  

Is that a counterfeit check?

The Problem is increasing. Can you spot the Clues?

  • Look
  • Feel
  • Listen
  • Learn common counterfeit techniques to protect your business from fraud

All you have to do to know how to create fraudulent checks these days is to turn on the nightly news, or pick up a current news magazine or newspaper. As a result of this training information, and the ease and availability of methods and material, we are experiencing more check fraud than ever before in the history of banking.

How do we protect ourselves against this onslaught of fraudulent activity?

  • First and foremost - know our customers . It is your primary and most useful defense, and one that customer service training should emphasize.
  • Second - know how the alterations and counterfeiting are done , so you know how to recognize them. Almost all alterations or counterfeiting methods leave some kind of clue.

There used to be a joke about having a magnifying glass at every bank teller's station. In today's environment, a good, high-strength magnifying glass is a good investment for your business.

Here are some of the most common clues-and the ways to discover them.

  • Erasures: depending upon the type of ink and eraser used, the paper will either be "furred", or the ink may not have been removed completely…usually used on ball-point pen ink only.
  • Bleach: used to fade the ink color, but also bleaches the paper and creates a faded "blister" on the back.
  • Opaque liquid cover-up: painted over original information, so that new information may be added. This liquid is available in a variety of colors that can be matched with the document. The texture of the added information will appear to be different, and the covered spot is usually visible if held up to the light. This type of alteration is generally used to alter typed information or to alter signatures. Cellophane taped-material: invisible tape, sealed so tightly as to be unnoticeable, can restore a torn or mutilated check. Contact the maker.
  • Self-adhesive paper products: placed over original writing, new information added. Hold it up to the light to "read through" to the original.
  • Correction tape: used on a typed check, to type over what has been originally typed, and then re-typed with other information. No matter how carefully the check is replaced in the typewriter, under a good magnifying glass, you can discover signs of typewriter correction tape use.
  • Red ballpoint pen: will not microfiche. If a check is written in red ink, the microfiche will indicate a blank check. Ditto for a very light blue pen. The use of red and light blue pens is a favorite trick of criminals involved with "statement cycle" crimes such as kiting or embezzlement.
  • Overwriting: particularly with a felt tip pen. Get out that magnifier again - you'll be able to read the original in the middle of the overwritten lines.
  • Addition: particularly to the payee line. The added information will be out of line with the original, or may even be in a different font or print style. Often the "memo" line will also be filled out..a favorite trick of criminals attempting to "legitimize" the appearance of the document.
  • Printing: using a computer-aided alteration to make a starter check appear to be printed by a check manufacturer. Also used to change information on legitimate checks such as cashier's check or teller's checks.

Can you tell a counterfeit by its “feel’?

Your hands and fingers may be your best defense in identifying counterfeit currency as well as counterfeit checks. Take a brand new piece of currency and lay it on a hard surface. Take your fingernail and strum it on the clothing of the portrait. Feel the "bzzzzz"? That's because there are several layers of ink on the top of the paper. You can feel it with the tip of your index finger on the words "This note is legal tender…"

If a laser printer is used to print a check, that same feel will be there. That's because the toner sits on the top of the paper, creating that toner ridge. A color copy, though not glossy if powder toner was used, will have the same feel.

A real check, printed by one of our check printers, is done by offset printing. Ink soaks into the paper, leaving no toner ridge. The check information, including the MICR line, is perfectly smooth. A cashier's check, or teller's check, will also be smooth, with no toner ridge on the information of the drawee bank or on the MICR line. If you feel the "bzzzzz" on that information, you need to check very closely.

One last place to look..the back of the check.

If a check has been cut by an imprinting machine, there will be a series of dots, creating a uniform indentation of the surface of the paper. There will be uniform "blisters" on the reverse. See if they match. Information created by an imprinting machine may be altered on the document's face by using a fine-line pen. This alteration is accomplished by carefully drawing lines or dots, simulating the pattern created by the imprinting machine. The reverse of the document will be blistered in the altered area. This technique is known as "jail-house art".
 

OFFICE SUPPLY SCAMS

  • Do you have purchasing controls?
  • Do you have a regular supplier for office purchases?
  • Do you “buy the specials”?
  • Do you double check your invoices and statements?

Your organization could be a victim of an office supply scam … IF you don’t have adequate purchasing controls. You can protect yourself by learning to recognize the scams and understanding your rights. The typical office supply scam involves goods or services that you routinely order: copier paper, toner and maintenance supplies, equipment maintenance contracts, or classified advertising. When fraudulent telemarketers call, they often lie to get you to pay for items you didn’t order, or to get you to pay more than you agreed to. How? The caller may falsely claim to be your "regular supplier" or to tell you that the offer is "special" or "good for a limited time only."

Office supply scam artists generally use three ways to take your money — the Phony-invoice , the Pretender , andthe Gift-Horse .

Phony-invoice Scams
The goal of the phony invoice scam is to get the name and address of an employee so your organization can be shipped and billed for unordered goods or services. The invoice includes the employee’s name as the "authorized" buyer. Scam operators use various ploys to get an employee’s name: They may call asking for help completing an order, claiming that "the accounting department lost the name of the person we should send these supplies to," or they may ask for the name of the person in charge of your Yellow Pages advertising. Once the con artist has an employee’s name and address, he’ll ship the unordered merchandise. The phony invoice arrives a week or so after — for two reasons: First, the inflated price — as much as 10 times what you’d pay for the same goods from a legitimate supplier — is less obvious if the invoice arrives after the merchandise has been received and stocked. Second, the chances are good that you’ve used the merchandise before the invoice arrives. Many organizations mistakenly believe that they must return unordered merchandise or pay for unordered merchandise if they’ve used it.

A twist on this approach may have the fraudulent seller timing a phony invoice to match your purchase of legitimate services from another vendor. For example, the seller sends you a bill for unordered classified advertising soon after your ad runs in a legitimate publication. The scam operator hopes you’ll be confused and pay his bill instead of, or in addition to, the o ne from the legitimate company.

The Pretender Scam
In the pretender scam, the caller may pretend to be your regular or previous supplier, a replacement, or an "authorized" supplier. By convincing you that the goods or services and prices offered are the same as before, the caller hopes you won’t bring up prices, quantities, and brands. Even if you do, the seller may try to brush you off by saying, "We’ve supplied you in the past, but it’s been a while," or "The price is the same as last time." If you insist on a price quote, the seller may give a price that sounds reasonable for one carton but is actually for a single unit, such as "$19.95 in a carton of 10." Translation: the carton price is 10 times $19.95 — or $199.50.

In one variation on this scam, the caller misrepresents the quality, quantity, type, price, or brand name. For example, the ribbons for your IBM typewriters may not be IBM brand ribbons, or the toner for your Xerox copier may not be Xerox brand toner. Some scam artists try to duplicate brand name packaging; others sell half a carton of merchandise at the full-carton price. Similarly, sellers of Yellow Pages advertising may actually represent fly-by-night outfits that distribute few, if any, telephone directories.

In another twist, the caller uses high pressure tactics to rush your purchase decision and dodge questions about price, quantity and brand names. The seller may falsely claim that prices are going up soon, someone was forced out of business, a warehouse is overstocked, or a limited inventory of government surplus is available. Or that a computer glitch delayed notification of a price increase, but, as a courtesy, an order has been reserved for you at the "regular" or "old" price.

Or, the seller may misrepresent the purpose of the call, saying that he’s calling to send you a promotional item such as a cordless screwdriver, free samples, or a catalog so you’ll "think of him next time you order." Or the seller may claim that he’s conducting a survey of office equipment or updating company records, leading you to believe that he’s the regular or previous supplier. Before hanging up, the caller may mention — in passing — actual merchandise. "I’ll send that screwdriver to you right away ... and while I’m at it, I’ll throw in a few deodorant blocks." Soon, a shipment arrives, followed by the bill.

The Gift-Horse Scam
The gift-horse scam tries to create mistrust within an organization. The scheme starts when the caller tricks an employee into accepting a gift — a free promotional item — with a passing reference to merchandise or services. You receive overpriced unordered merchandise, followed by an invoice with the employee’s name. When the organization questions the employee, the fraudulent seller is betting that the employee will be nervous about the gift when he denies placing the order. The hope is that the organization will doubt the employee. When this scheme works, the organization believes that the employee blundered into ordering something that must be paid for.

Protect Your Organization
You can protect your organization from paying for unordered goods and services. Here’s how:

  • Know your rights . If you receive supplies or bills for services you didn’t order, don’t pay, and don’t return the unordered merchandise. You may treat unordered merchandise as a gift. By law, it’s illegal for a seller to send you bills or dunning notices for unordered merchandise, or ask you to return it — even if the seller offers to pay for shipping.
  • Assign designated buyers and document your purchases . For each order, the designated employee should issue a purchase order — electronic or written — to the supplier with an authorized signature and a purchase order number. The order form should instruct the supplier to note the purchase order number on the invoice and bill of lading. The buyer should send a copy of every purchase order to your accounts payable department. Keep blank order forms secure.
  • Check your documentation before paying bills . When merchandise arrives, the receiving employee should verify that it matches the shipper’s bill of lading — paying special attention to brands and quantity — and your purchase order. Refuse merchandise that doesn’t.
  • Train your staff . Train everyone in how to respond to telemarketers. Advise employees who are not authorized to order supplies and services to say, "I’m not authorized to place orders. If you want to sell us something, you must speak to _________ and get a purchase order."
    Buy from people you know and trust. Authorized employees should be skeptical of "cold" or unsolicited calls and feel comfortable saying "no" to high pressure sales tactics. Legitimate companies don’t pressure you to make a snap decision. Finally, consider asking new suppliers to send a catalog first. 

OTHER SOLICITATIONS

Disguised as Invoices

  • Invoice or statement appears to be for legitimate office purchase
  • Check out the “fine print” .. may be a solicitation

Don't be victimized by con artists who try to get your company to order goods or services by mailing you solicitations designed to look like invoices. The unscrupulous individuals who mail these know that some unsuspecting managers and employees will be fooled by their appearance and will automatically remit payment, thinking the company had placed an order.


Title 39, United States Code, Section 3001, makes it illegal to mail a solicitation in the form of an invoice, bill, or statement of account due unless it conspicuously bears a notice on its face that it is, in fact, merely a solicitation. This disclaimer must be in very large (at least 30-point) type and must be in boldface capital letters in a color that contrasts prominently with the background against which it appears. (Remember…con artists don’t follow the “rules”.)


The disclaimer must not be modified, qualified, or explained, such as with the phrase "Legal notice required by law". It must be the one prescribed in the statute, or alternatively, the following notice prescribed by the U.S. Postal Service: THIS IS NOT A BILL. THIS IS A SOLICITATION. YOU ARE UNDER NO OBLIGATION TO PAY THE AMOUNT STATED ABOVE UNLESS YOU ACCEPT THIS OFFER.

Some solicitations disguise their true nature. Others identify themselves as solicitations, but only in the "fine print". In either case, protect your company's assets by withholding payment until you have verified whether your company actually ordered and received the goods or services reflected on the document. If not, do not pay.

Con artists often make large mailings of illegal solicitations. Even if you are not fooled, you can help the Postal Inspection Service learn of such mailings by reporting the receipt of non-conforming solicitations to your local postmaster or the nearest Postal Inspector. The Postal Inspection Service may be able to prevent other business people from being victimized. 

BEWARE OF “OVERPAYMENT” SCAMS

The CEO was overjoyed; her company had generated its biggest sale of the year, and a cashier's check had arrived to cover the payment. Then the client called; he needed to cancel part of his order. Could he get a partial refund? The grateful entrepreneur complied, succumbing to a kind of fraud running rampant.  

  • Cashier’s check or money order for more than purchase
  • Customer cancels part of order & requests refund of payment
  • Confirm authenticity of cashier’s check or “official bank check”

Overpayment scams use startlingly authentic-looking phony checks to defraud small-business owners distracted by seemingly large orders.

How does the overpayment scam work?

Typically, a company that's selling or marketing itself on-line gets an order accompanied by an "official bank check" or a cashier's check. Then the client contacts the company to say it needs to reduce its order and asks for a refund of part of the money. Typically, the client has sent a very large check -- maybe $50,000 or $70,000 -- and ask for $4,000 to $7,000 back. So, the business owner is willing to refund such a small portion in order to keep the client happy. It takes 10 to 15 days to find out that the original check is bad, by which time the business is out the money it sent as a "refund."

Who is falling victim to this scheme?

Hotels have been victims when some person or organization books a large block of rooms and meeting space for a conference, sends in a check to cover the reservation, and then says it has had some cancellations and need to refund some portion of the money.

The scam has also victimized people like caterers, event planners, and companies selling high-end products like jewelry, sports equipment, vehicles, and things like that. The common thread seems to be businesses that advertise themselves on the Internet, either through business directories or with their own Web sites and on-line marketing materials.

Why are those scammed perpetrated primarily by on-line companies?

It's wonderful when companies can open up their businesses to the global marketplace, but with that global marketplace come global scam opportunities. While small companies are encouraged to market using the Internet, but should be concerned that it opens up the opportunity to be surfed and scammed.

Can't bad checks be identified quickly through national financial databases?

Personal checks are returned right away, but these scammers use what looks like a cashier's check, and those don't move through the electronic check-verification process quickly. It takes up to two weeks, by which time the victim has already sent the refund and sometimes even spent some of the money.

Small companies typically don't have in-house credit managers to check out large payments, and the owner figures if the money has arrived in advance, everything must be O.K. These checks also tend to be for very large amounts, so the small-business owner is excited to make such a big sale and often doesn't question it too closely.

What happens when the check is returned as a phony?

Well, the refund that has been requested has typically already cleared the victim's bank account. Sometimes, the merchandise has been drop-shipped to a third-party destination, where it is then fenced. And in the worst-case scenario, the victimized business has already spent some of the money it thought had come in.

Banks hold business owners liable for returned checks, plus service fees and return charges. So, all of this becomes a loss. For very small companies, it can amount to a catastrophic loss.

If businesses report these crimes, do they have a chance of getting their money back?

It is most unlikely that a small business will recover any of the funds. It is so hard to trace the check back to the source; it's virtually impossible. That's why it's so critical to warn people about this problem.

How can entrepreneurs avoid overpayment scams?

Beware of any significantly large or unusual order, especially if it comes from a new client and you're convinced it's the best sale you've had all year. That's the time when you could get burned. Take any check you're not familiar with directly to your banker and have it verify that the check is authentic before you send any refunds or release any merchandise.

Do these checks typically look authentic?

Absolutely! You can go to the Internet and without any identification or bank-account information, you can order checks or create checks with any kind of routing and order numbers on them. Law-enforcement agencies are trying to shut down that possibility, but they haven't been successful yet. The fact is, technology and Web services are readily available to criminal elements, and they can create a better-looking check than the one that comes from your bank stock.

Bogus yellow pages ads

  • Yellow Pages invoice looks authentic .. may include “walking fingers” logo
  • Look closely .. may have faint “solicitation” notice appearing as a watermark
  • Solicitation for unknown or unfamiliar publication

Unscrupulous promoters are soliciting advertising for on-line, alternative or non-existent business directories. Although these directories appear to be legitimate Yellow Pages publications, they are not distributed to the public, posted on the web, or promoted as promised. As a result, the directories - if they exist at all - offer no benefits to businesses that pay to advertise in them.

The solicitation to buy ad space may be designed to look like an invoice and bear the "walking fingers" logo and the Yellow Pages name.Neither the name nor the logo is protected by federal copyright or trademark registration. That's how fraudulent promoters are able to lead businesses to believe they are affiliated with local telephone directories.

The $10 billion Yellow Pages industry has launched a coast-to-coast program to counter pervasive, nationwide fraud that plays upon the legitimacy of the second-most referenced book after the Bible. According to one survey, nearly one-third of owners said their businesses have received bills for Yellow Pages advertising they never ordered. The Yellow Pages Publishers Association estimates more than$550 million each year is being collected by con artists soliciting Yellow Pages advertisers with bogus invoices for print and on-line directories.

A fraudulent seller may send you a bill for unordered classified advertising soon after your ad runs in a legitimate publication hoping you will be confused and pay his bill instead of, or in addition to, the one from the legitimate company.

The U.S. Postal Service requires solicitations that look like invoices, bills or account statements to carry the following notice:

“THIS IS NOT A BILL. THIS IS A SOLICITATION. YOU ARE UNDER NO OBLIGATION TO PAY THE AMOUNT STATED ABOVE UNLESS YOU ACCEPT THIS OFFER”.

However, the above notice may appear in the background as a faint “watermark”. Before you buy advertising space through a mail solicitation or pay an "invoice," take the following steps:

  • Check out the company and its publication. Call your local Yellow Pages publisher to see if it is affiliated with the soliciting company.
  • Ask the publisher for written information about where and to whom the directory is distributed.

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