Money orders are quite popular all around the globe as a means of payment for people who don’t use personal checks, a credit card, or a debit card. Since a legitimate money order can only be purchased with real cash, most people assume that all money orders are genuine. Unfortunately, that is not the case.
What is a Money Order, Anyway?
Money orders were created as a type of check for people who do not have bank accounts. In order to use a money order, you must purchase one from one of the many retailers that sell them. This is done by giving the retailer the amount of cash that you want the money order to represent, plus a small fee.
They work well in instances where a person or business only takes checks or cash. If you want a record or receipt of your transaction but don’t have a checking account, you can always pay with a money order.
For example, if you wanted to pay your rent, but either your landlord would not take cash, or you did not want to give the landlord cash, you could purchase a money order. To pay $900 rent, you would give the retailer $900 plus the fee that they charge for the service.
It is easy to see why most people would think a money order is guaranteed money. Unfortunately. This makes them susceptible to being duped by a money order scam. Therefore, it is important to understand these scams and how they work.
Common Money Order Scams
The best way to avoid money order scams is to learn to recognize them and understand how they work. Here are a few money order scams to be aware of.
1 – Bogus Buyer Scams – For most money order scams, the scammer will send the victim a fake money order as payment for goods or services. This is often done through the mail to unsuspecting vendors. The vendor will then take the money order to their bank and deposit it, not knowing that it is fake.
Unfortunately, many vendors will mail the goods or complete the service before making that trip to their bank. Since many money order scams involve mailing products, the packages have often been sent out before the vendor realizes that he or she has been scammed. This is known as the Bogus Buyer Scam.
2 – Bogus Buyer Remorse – Scammers might also send fake money orders to pay for services online, such as copywriting, editing, coding, website building, and more. Before the money order has even reached the recipient, however, the sender may contact them, claiming some sort of emergency and asking for a partial refund.
These scammers will ask you to deposit the money order into your bank account, and then mail them a partial refund, and they usually rush you to get the money mailed out, “because it is an emergency.” Sadly, by the time you and your bank realize that the money order is fake, you’ve already sent money to the scammer.
This is sometimes done via fake checks as well, where the scammer will mail you a check for a large amount, ask you to deposit it, and then mail them back part of the money. This is known as Bogus Buyer’s Remorse.
3 – Deposit Assistance – In this scam, the person will claim that they do not have a bank account and feign ignorance or inability to open one. They will ask you to deposit a money order for them and then give them the money for it.
This can be very dangerous, since the money can sometimes be legitimate, and even the money order may be real. Unfortunately, if you do this, you could be helping a criminal to launder money and may be held liable. Many times, money order scams are seen as the same as using a fraudulent check or counterfeit checks.
4 – Rent Reversing Scam – This one is more for landlords and real estate agents to watch for. The perpetrator will send you a money order that is enough for both a non-refundable fee, such as a deposit on a home or office and a refundable first month’s rent. This is also an area where fake check scams are prevalent.
They will then immediately change their mind about renting the space and ask you to deposit the money order, and just refund them the rent. Since the entire money order is fake, you are responsible for the entire amount that you deposited, plus the amount that they convinced you to refund via wire transfers like Western Union, or mail at the post Office.
5 – Excess or Overpaid Scam – In this particular scam, a person will mail you a money order that is made out for more than you had asked for a product or service. They will then pretend to realize their mistake and ask you to deposit the money order and send them a refund via money transfer for the amount of extra money that was over.
Once again, with these types of money order scams, not only will you be held liable to pay for the full amount of the fake money order that your bank cashed, but chances are that you will never recover the money that you mailed to the scammer or sent via money transfer.
When the bank discovers that the money order is fake, your account may be immediately debited the amount that was stolen from the bank. If this puts your account in the red, you may have other checks or debits that bounce, and fees that come with it. In some cases, you may even be held criminally responsible.
6 – Romantic Money Order Scams – In this type of scam, an online catfish will pretend to grow feelings for you over a period of time. Once he or she is sure that they have formed a connection with you, they will suddenly have an emergency and need you to help them to get some money.
They will assure you that they don’t expect you to pay for it, but instead, they will insist that they can send you a money order for the amount that you can send them. Of course, this money order, and their love, will sadly be fake. bank employees may be empathetic, but you will still have to pay those insufficient funds and could end up in jail.
Other Ways to Avoid Being Scammed
Aside from learning to recognize and avoid the scams listed above, you can also take a few extra steps. For one, you should never agree to refund money through places such as MoneyGram and Western Union for funds that were sent to you via money order. You also want to be careful when cashing money orders in grocery stores.
You should also make sure that a money order is legit before you spend any of it. Allow the bank time to process it before you send any of that money to anyone or use it for anything. Most banks will inform you when a money order has been cleared, usually in at least one business day. Money order deposits and all processing fees should be verified and paid before you spend that cash.
What Can You Do?
There are a number of things that you can do if you think that you have been the victim of this type of common scam through money orders or wire transfer services. First of all, if you believe that a money order that you have been given or sent looks suspicious, do not try to cash it, shred it, or write on it.
You should always keep the original envelope of any money order that you receive. If you know your banker well, you may mention to them that the money order looks strange and tell them that you do not want to cash it or deposit it until you know that it is legit.
You may also take the money order to the Post Office and tell them that you think that it may be fake. Especially if the fake money order looked like a Postal Service money order, it is important that the Post Office workers are aware that they may be dealing with money order fraudsters.
You will want to take any emails, messages, or letters with you that can prove that you might be the victim of a scam. You should also file a police report to further show that you are in no way connected to the crime.
Federal law enforcement agencies deal with many forms of fraud and scams every year. Whether it is secret shopper scams, mystery shopper scams, phishing phone calls, bogus money, or other scams, millions of dollars are lost to victims of scams.
Keeping cash from theft is also illegal, and so even if you are the victim, you can still be in trouble if you have received a fake money order or check. Always make sure to keep screenshots, paper records, and proof of every transaction, and never accept fishy money orders or checks from strangers.