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What's the best way to get paid?

Dr. Don TaylorDear Dr. Don,
What's the best form of payment to request when I sell something? I've heard that there have been reports of fraudulent cashier's checks. Are certified checks safer? What about money orders? What are the pros and cons for each? -- Kristie Cash

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Dear Kristie,
Fraud is an issue for virtually any method of payment, not just cashier's checks. There have been some problems with fraudulent cashier's checks as well as a scam where you're asked to accept a cashier's check for a higher dollar amount than the purchase price and requested to return the difference to the buyer -- often as a cashier's check. An article on Bankrate has more on this scam.

A cashier's check is drawn by a bank on itself, signed by a cashier or bank officer and made payable to a third party named by the customer. It is an instrument used to guarantee funds are available. There is usually a fee associated with cashier's checks. Buyers may balk at paying up to $5 for a cashier's check vs. 90 cents to $1.25 for a USPS money order.

You should be able to contact the bank to confirm both the check number and amount of the cashier's check. In contrast, a certified check is a check certified by the bank where the account is held, showing that there are sufficient funds in the account for the bank to clear the check.

A money order is another form of payment instrument typically purchased with cash. Western Union and the United States Postal Service are the two major issuers of money orders in the United States. Money orders can be cashed or deposited at your financial institution. The USPS will cash its money orders at any post office.

The USPS maintains a list of missing U.S. money order forms on its Web site. It also maintains a page on its site that describes how to check the authenticity of a money order.

Western Union's BidPay and eBay's PayPal both offer sellers an alternate way to receive payment for goods and services. Consider the costs as well as your protection against fraudulent activity with these methods of payment as well.

Regardless of which payment method you choose to accept, you'll want good funds on deposit before shipping an item. That means that the check has cleared the bank it's drawn on, not that your bank no longer has a hold on the deposit. Money orders or cashier's checks should work fine when you take some basic precautions.

-- Posted: Jan. 12, 2005




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