When Your Offline Security Is Threatened By Your Online Activity, Part II
Posted by Joe Addiego
As blogged a month ago, several Craigslist users have been the target of violent robberies after being “cased out” during online transactions for the sale of their personal goods. It turns out that in addition to posing risks to your physical health, the use of message boards or auction sites can affect your financial health, as well, even if the financial transaction occurs offline.
The San Francisco Chronicle just reported an unfortunate incident that happened to a San Francisco resident, who unknowingly cashed a phony check he received in exchange for the sale of two bicycles he had posted for sale on Craigslist. The check was for an amount in excess of what he negotiated, but despite some reservations, the seller cashed the check anyway. Apparently, the scam was intended to induce the seller to deposit the check at his own bank, so that the scammer can cancel the check and request that the bank return the money, which would come out of the unsuspecting seller’s account, before the check is spotted as a phony.
Fortunately for this seller, he did not deposit the check into his own account, so those funds were not immediately at risk. However, he managed to incur financial losses another way. Because he feared that the check would bounce, he went to the bank on which it was drawn to cash it. After the seller negotiated the check, thus unwittingly participating in the crime, the bank correctly suspected it was fraudulent and called the police. The seller was handcuffed and hauled to jail, where he spent the next several hours until his father posted bail. Ultimately, the seller was exonerated, but he incurred over $14,000 in expenses to do so.
Despite his best efforts, the seller was not able to recoup these losses from the bank. According to the California Supreme Court precedent in Hagberg v. California Federal Bank, the Bank was not required to reimburse the seller, because reporting a suspected crime cannot form the basis of liability in California, even if it later is determined that no crime was in fact committed. As a result, the seller was left holding the bag.
If this type of crime proliferates, then look for there to be an outcry to change the law and hold banks or others reporting these crimes to be held to a higher standard of diligence before calling the police. In the meantime, be aware that you alone, as a seller, bear the financial consequences of being caught up in one of these schemes. Be smart, trust your instincts, and take precautions to avoid falling prey to these scammers, either by using an authorized and protected online payment service such as Paypal, or by insisting that the buyer pay by cashier’s check or money order.
