Apparently with Cheque Fraud there is a new twist on an old con.  It is not sufficient to just hear from your bank that the cheque has cleared before you use any part of the funds.

Most cheque-clearing systems used by North American banks don’t know, with 100% certainty, for months if a cheque is good.  That’s because cheques have to physically travel between banks, branches and processing centres to be truly verified. Until the journey between the bank where the cheque is deposited and the paying bank is completed, there is no confirmation that a cheque is legitimate.  The depositing bank essentially credits the depositor with the funds while the cheque undergoes the “clearing” process.  It can take a long time for a bank to figure out a cheque is fake and conmen rely on those bank lag times in order to pull off their crime.

Jay Stark, Vice-President of the fraud department at the Royal Bank, is quoted as saying that “the customer remains responsible” even if the bank has given the cheque clearance. Apparently the law allows a bank to come after a customer, up to six years later, for a bad cheque.  Stark has promised to take up the issue of cheque clearance with the Canadian Bankers Association (CBA) and the Canadian Payments Association (CPA).

If you suspect the source of a cheque, then you are best advised to not even take it to the bank for deposit, since there can be fees involved in the cheque going through the clearing process. Not all phony cheques look phony. There are many horror stories so be warned and be very, very cautious.

The first Google definition for the word ‘check’ is examine so as to determine accuracy, quality, or condition. The very name is encouraging you to do your due diligence on that piece of paper that looks so much like a genuine cheque.  Do check it out: it may save you a lot of money.

Technorati Tags: Canadian Bankers Association, Canadian Payments Association, check, cheque, clearance