Phony money orders
cause increased 'holds' -- Page 2By
Laura Bruce • Bankrate.com
A Minnesota case was another Nigerian scam. A local man advertised a car on
the Internet and received a call from someone claiming to be in Nigeria who had
a friend in Washington, D.C. looking for that type of car. The seller's asking
price was too high, but then the Nigerian called back and said his friend wanted
the car after all. When the victim said the vehicle had been sold, he was told
a money order had already been sent to pay for the car. "Cash the money order
and wire the money back to me," said the Nigerian. OK,
it may be hard for you to believe that people fall for these scams, but it happens
all the time. Fortunately, the bank got wind of the scam before it was too late. "We
made him deposit (the money order) to his checking account and he took out a new
money order to send to the guy," says Gary Williams, president of First Security
Bank in Lake Benton, Minn. "We didn't know it was bad
at that point. He's a customer and when we received the fake money order back,
we stopped payment on the one he took out to send to Africa." One
scam leads to another
For First Security Bank, the ordeal was just beginning. "That
money order that he bought from us and sent to Africa has been copied with our
bank name and our employee's signature," Williams says. "We've received
calls indicating that $155,000 in money orders have been issued off the one they
copied. We've had calls from Florida to Massachusetts, Montana, Wyoming, South
Carolina and North Carolina. But, I've only talked to one bank that has disbursed
funds on that particular money order." The problem isn't
just happening to money orders issued by banks and convenience stores. The U.S.
Postal Service is under attack, too. Postal inspector Paul Krenn says that in
the 12 months ending September 2004, the Postal Service had 3,700 instances of
counterfeit money orders out of 188 million that were issued. "In
January of this year we already hit that number (of fakes) just since Oct. 1,
2004," says Krenn. "The Postal Service is in the
process of redesigning the money order. It will have enhanced security features.
But if people don't know what they are, it won't stop the problem. It says on
the money order that there's a watermark, but many victims say they weren't aware
of the security feature." Several banks whose money orders
have been counterfeited either refused to be interviewed for this article or didn't
return phone calls. The U.S. Postal Service takes the opposite tack and goes to
great lengths to show the news media and consumers what their money orders look
like and how to identify security features. Familiarity breeds wisdom
"The counterfeits,
as good as they are, haven't compromised (our) security features," says Krenn.
"But people who are accepting the money orders as payment aren't familiarizing
themselves with the security features. We've found there are a number of people
who will accept them without knowing what they're accepting. That's where the
vulnerability is." The redesigned U.S. Postal Service
money order won't be available until sometime in 2006, but current money order
security features are explained in detail on its Web
site. Familiarizing yourself with the features is one of the best ways to
avoid becoming a victim. Probably the best way to avoid being
victimized is to quit falling for Nigerian scams and all the other
scams conjured up by creeps trying to take your money. But when it comes to
accepting nonpostal money orders, perhaps the best advice is to not accept a money
order unless you know the person who is giving it to you, or until you can verify
its authenticity. Another consideration for financial
transactions with strangers is PayPal, which you can read about in Bankrate's
Guide to eMoney.
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