Media Release issued 22.10.03

OMBUDSMAN WARNING ON INTERNET SCAM

Counterfeit cheques drawn on a major US bank are at the centre of the latest internet scam, the Financial Co-operative Dispute Resolution Scheme (FCDRS) warned today.

National Ombudsman, Jan Taylor, has urged consumers and small business operators who sell goods over the internet to be wary of approaches by international customers who offer to pay for the goods via a cheque from a third party.

She said two cases of the scam came to light this month in regional New South Wales. One involved saddles valued at more than $10,000.

"Under this scam, the buyers order fairly expensive products. They offer to speed up the transaction by arranging for a third party outside Australia who already owes them money to send a cheque directly to the Australian seller," she said. "The amount of the cheque is for several thousand dollars more than the debt, and they ask that the balance be returned to them with the goods once the vendor has received the cheque and it has been cleared."

Ms Taylor said the cheque arrived as promised and sensibly the customer waited for it to clear before sending the goods. "After 14 days, and in the absence of contrary advice, the financial services provider in good faith assumed the cheque had been cleared and released funds to its client. The goods, plus a cheque for the difference in the amounts of the sale price and the third party cheque, were then forwarded overseas as agreed."

Three weeks later, the US bank refused payment to the Australian financial institution because the original cheque was counterfeit. The Australian organisation then asked its customer to return the amount of the cheque. Effectively, this meant the customer was out of pocket not just to the value of the saddles, freight and insurance but also the cheque.

"The financial services provider involved in both cases has since extended the clearance period for overseas cheques to 40 days, however other providers, consumers and businesses are still at risk of being caught by the scam," Ms Taylor warned.

She advised consumers to seek expert advice before allowing the sale of any goods to become part of a three way deal with unknown parties.

The FCDRS provides an independent external dispute resolution service for consumers who are in dispute with building societies, credit unions and other financial service providers.

FOR FURTHER INFORMATION:
email kris@fcdrs.org.au