Known Scam?

[expat]

Once a cheque has really cleared the money is yours.

No, that's not true. Clearing a cheque is a matter of bank mechanics, not of ownership of money.

Once it has cleared, the bank will let you at it (they may indeed choose to let you at it before then). but if it turns out not to have been valid, they will "unclear" it. Then the situation is just the same as if they had let you withdraw against it before it cleared: the money that you took out wasn't yours because it wasn't really in your account. And if you have closed the account and withdrawn the balance, you will owe the bank the money. Whether they catch you is a different question, but you will owe them it.

[Rebecca Loos]

that's quite interesting though, isn't it - as you say, you are not going to close your account every time you deposit a cheque in, however, for those rare occasions in life when you get a big one (e.g. house sale), it might be worth considering.

I mean, let's say I am about to sell my house in the UK - equity about £55,000. I expect I'll get a cheque from the solicitor. Should I open an account specifically to deposit it in, then move the money to another account and finally close the account that I just opened to receive el chequo.

That will protect me against anything dodgy going on at the solicitor's end?

[Xerxes]

that's quite interesting though, isn't it - as you say, you are not going to close your account every time you deposit a cheque in, however, for those rare occasions in life when you get a big one (e.g. house sale), it might be worth considering.

I mean, let's say I am about to sell my house in the UK - equity about £55,000. I expect I'll get a cheque from the solicitor. Should I open an account specifically to deposit it in, then move the money to another account and finally close the account that I just opened to receive el chequo.

That will protect me against anything dodgy going on at the solicitor's end?

Not really, because you still owe the bank the money. Unless you can disappear for an extended period, they will not just "let it slide" for the sort of sum you have mentioned. They will come after you to get the money back (if they can find you).

[Rebecca Loos]

so should you refuse cheques and insist on some sort of other transfer mechanism then? Would a banker's draft be safer? Are there any other methods?

[Xerxes]

so should you refuse cheques and insist on some sort of other transfer mechanism then? Would a banker's draft be safer? Are there any other methods?

Yup, accepting a cheque for a large sum from someone you don't know certainly has risks attached. A banker's draft is not really much more secure. Although in theory the money is "guaranteed" with a banker's draft, if it turns out the money in the originating account was dodgy, the bank will again come to you to get their money back.

Although cash or other tangibles are more secure, even then, if the money turns out to be stolen, you will have to give it back. The "I bought it in good faith" defence is a complete legal fiction and has as much standing as "common law wife" (i.e. none). If the goods / money have been fraudulently obtained, they ain't yours and you have to return them / it.

Best thing is not to deal with a solicitor you suspect to be dodgy. At the end of the day, if you're the last leg in a dodgy payment chain, it's you that ends up out of pocket. The only possible exception is if YOU paid with a credit card, then you are protected to some extent (upto £30K I believe).

[ASB]

Generally when you ask "is it cleared" and they say yes they just mean it is cleared for drawing, this can be uncleared.

You need to get the banks answer in writing as to whether it is cleared for value. In this case I believe (but Xerxes might be able to refute) that it is cleared and will not be clawed back under any circumstances.

[Chessplayer]

The scam works something like this :

They deposit £1000 in your account

you withdraw it and wire it to them

They then cancel the original cheque/deposit

The bank then charges you £1000.

You are £1000 down, they are £1000 up

wire it to them....?
why would i do that?

[wendigo100]

wire it to them....?
why would i do that?

Because that's what they ask you to do. Isn't it?

[Xerxes]

You need to get the banks answer in writing as to whether it is cleared for value. In this case I believe (but Xerxes might be able to refute) that it is cleared and will not be clawed back under any circumstances.

Nope, there is no such status I'm afraid. The bank can "unclear" the cheque at any time, no matter how much time has elapsed, even years.

Look at it the other way around. Suppose you go on holiday for a month, come back and find some naughty person has fraudulently written a cheque drawn on your account. You might not notice this for another month, or maybe even a quarter if you have quarterly statements and no on-line banking. How would you feel if you call up your bank and they say, "sorry, chum, the cheque's cleared, there's nothing we can do"?

What they do, of course, is "unclear" the cheque, take the money out of the account at the other end and give it back to you. And they will do this whether the cheque is "cleared" or "uncleared" and whether one day, one week, one month, one year or ten years has passed.

[AtW]

How would you feel if you call up your bank and they say, "sorry, chum, the cheque's cleared, there's nothing we can do"?

BS: In this case its the BANK who pays - they can't just claw back value of cheque cleared months ago. Prove otherwise by providing links to reputable sources that talk about stories of this happening.