Today I was informed of a new scam. A party posing as a buyer sends an earnest money deposit in the form of a cashier’s check to a title agent. A day or two later the buyer informs the title agent that the transaction has died and requests a wire return of the earnest money. The agent wires the funds as instructed without waiting for notification that the cashier’s check has cleared the bank collection process.
While there are many variants to the scheme, one or more of the following red flags are typically present:
- No contact information for the seller is provided
- The buyer is out of the country
- The cashier’s check is received from another country (meaning the postmark or return address is not within the United States
- The transaction is purportedly to be an all cash transaction
- The amount of the cashier’s check is more than is supposedly needed and a return of the “excess” is being requested and
- The agent has no prior relationship with the buyer
A way to avoid this scheme is that it is important to no earnest money or other funds are returned until such time as the original cashier’s check has cleared or you have independently verified its validity with the issuing bank.