Beware of bogus deposits warns the OBS

5 October 2004 - Smartnews

The Ombudsman for Banking Services is receiving complaints from people who sold goods to a purchaser only to discover that the supposed deposit into their account was in fact a stolen cheque and not cash.

Manager of investigations for the OBS, Advocate John Simpson, says "We have received a number of complaints on this issue and we would like to warn the public what to look out for. We hear horrific stories of people who have been conned and have suffered huge losses as a result of the scam." The scam can be perpetrated in numerous ways warns the OBS.

Simpson says, "One way is when the seller advertises their goods for sale; the thief establishes contact and offers to purchase the goods. The thief offers to deposit the selling price in cash into the seller's account and promises to fax the deposit slip as proof of payment.

"The thief is actually depositing a stolen or forged cheque into the seller's account. A deposit slip is then forged to reflect that the deposit was made in cash and faxes it to the seller. The seller thinks the deposit has been made in cash and hands over the goods to the purchaser. The seller realises later that he or she has been conned when the "cash" deposit is reversed by the bank."

The thief can also deposit a stolen cheque for a larger amount than the purchase price and ask the seller to transfer the balance back to him. The seller, thinking the deposit was in cash, does so, only realising later that the deposit was fraudulent.

Some helpful tips on what to look out for:

Never accept a deposit slip as proof of payment;
Always obtain written verification from your bank before handing over any goods or transferring money deposited back to the purchaser;
Where cheques are deposited, ensure they are legitimate;
Rather request special clearance on cheque deposits. This way the cheque is sent to the drawer's bank for verification before it is paid;
Do not hand over any goods until the cheque is fully paid.

Be aware that under certain circumstances, a cheque can be returned even after the funds have been released to the payee. Be wary of purchasers offering to pay the purchase price without having seen the goods or of purchasers who send their drivers to pick up the goods.

The banks are urged to continue assisting customers in preventing them from being defrauded in this manner.