Gallet Dreyer & Berkey, LLP | Fraud Alert - Beware if Someone Asks You to "Reissue" a Check
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Fraud Alert - Beware if Someone Asks You to "Reissue" a Check

09/05/2012 | Fall 2012 Newsletter
As part of our banking and finance practice, we have just become aware of a new scam that targets businesses that write checks. 

The scam goes like this:
Assume you write a check to John Smith to pay a debt and you give it to him. The next day, he returns the original check, and says, “Would you please instead give me a new check payable to Mary Smith, my wife.” You take the original and give John a new check. The next month, your bank statement shows that both the check to John and the check to Mary were paid on your account. 

How? Using a scanner or a smart phone, John electronically deposited his check before he returned the original, and asked you to reissue a new check. 

Who is liable for the two checks? 
A strong case can be made that you have to pay both of them. 

The lesson to be learned? 
Do not reissue a check, even if you get the original back, unless you first put a stop payment on the old check and then wait at least five business days. This does not guarantee that you will not have a problem, but it dramatically reduces the risk.