Don't think a stop payment order on a check will protect you

[kranky]

I've noticed more and more references to scammers using check cashing places instead of banks and it turns out there's a good reason from the scammer's point of view.

Let's say you hire someone to do some work and pay with a check. A couple days later, the scammer calls, says his wallet got stolen and the check was in it. He asks for a replacement, and says you can deduct the stop payment fee for the stolen check from the replacement check. A few days later you get a certified letter from Joe-Bob's Liquors and Check Cashing demanding payment of the check that you stopped payment on. Turns out that Joe-Bob cashed the check for the scammer then got stiffed by the bank because you had a stop payment order on the check. The scammer in essence has gotten paid twice as he cashed both checks with Joe-Bob.

According to the Uniform Commercial Code, you are liable to pay Joe-Bob. He accepted the check in good faith making him a "holder in due course" legally, and was unaware a stop payment order was outstanding. Could he have called the bank first? Sure, but he doesn't have to.

This is one reason why check cashing places are pretty comfortable about cashing checks as long as they think the check writer has the money to cover it. Stolen check? Scammer? Not their problem - it's yours.

 

[acemcmac]

Thank god I don't write checks. I have written mabye a dozen so far in my life...

 

[KLin]

I would wait 5-10 days before writing a new check so I could check with my bank if the original check was cashed/deposited.

 

[kranky]

Originally posted by: KLin
I would wait 5-10 days before writing a new check so I could check with my bank if the original check was cashed/deposited.

That won't protect you. The scammer could hold the first check until you gave him the replacement, then cashed both. If the scammer used a check cashing outfit, you'd still be liable to them for the one you stopped payment on.

 

[waggy]

i have written a few thousand checks. i have never been scammed. I wouldnt worry about this to much.

but then i do not write checks to places i would worry about.

 

[newParadigm]

pay cash? or with a CC? or theres always Direct Bank wire for those international transactions.

 

[kranky]

Originally posted by: waggy
i have written a few thousand checks. i have never been scammed. I wouldnt worry about this to much.

but then i do not write checks to places i would worry about.

I'm with you, waggy. I've also written thousands of checks without a problem. It's only a concern if you are writing a check to someone who might not be on the up and up. Sometimes people do that and in the back of their minds figure if something goes wrong, they can just do a stop payment on the check.

 

[doze]

Why would you replace a check if it was lost/stolen? One would not replace cash in this situation.

 

[axelfox]

What's the exact section of the UCC?

 

[mugs]

Originally posted by: doze
Why would you replace a check if it was lost/stolen? One would not replace cash in this situation.

Because a check is not cash.

 

[Mill]

Well, it would be simple to prevent such a thing. I'd first file for bankruptcy and then check myself into a mental hospital. I'd "improve" with medication, and then I'd be released. I'd hire a pack of minors to repeatedly purchase alcohol from Joe-Bob (with that name he'd surely sell), and then I'd have him busted by whatever authority has jurisdiction. While he was in jail I'd try my damndest to seduce his wife and/or daughter. I'd take pictures and send them to him on a daily basis. I'd then purchase the property next to his home when he got out of jail and I'd start raising chickens and goats. Unfortunately, I'd have a lot of old cars that I worked on at 3am as well, and my chickens and goats keep getting scared and running onto his property...

After being "sane" for a period of time I'd forget to take my medication. I'd burn Joe-Bob's store to the ground and salt the earth it sat on. I'd then kidnap him and throw him into a local swamp (he'd be covered in red meat). If he made it out alive I'd simply shoot him. After such time, I'd turn myself in to the law, get treatment for my "condition." Of course I'd plead not-guilty by reason of insanity, spend 5 years getting treatment and being stabilized, and then I'd be released as a model citizen.

I think next time Joe-Bob's heir to the his check-cashing throne should simply call the bank. It'd save a lot of time and even his life.

 

[kranky]

Originally posted by: axelfox
What's the exact section of the UCC?

Article 3, ss 3-302

 

[Sphexi]

Whenever cancelling a check, it's customary to wait 7-14 days. Get your bank to verify that it has not been cashed, and if you've gone that 14 days then go ahead and issue a new one. If the guy holds onto it then cashes it later, that is called fraud, and whether or not they come after you to try (and I emphasize try, because I would not be paying them at that point) to get the amount for the check, the guy cashing it would be spending time in jail.

 

[ElFenix]

article 3 is the most confusing piece of law ever written, imho.


but, without it the whole check writing system (and other types of negotiable instruments) comes crashing down.

 

[kranky]

Yes, you can go after the scammer legally. But the problem is that you still owe the money to the check cashing service.