How To Avoid Money Order Fraud

Learning how to avoid money order fraud protects the consumer against losing hard-earned cash to crooks. Initially, these financial instruments served those without checking accounts. Nowadays, the money order is an acceptable form of guaranteed payment in a transaction wherein goods change hands only after irrevocable remuneration is made. Not surprisingly, there are plenty of shady dealings the average consumer must learn how to avoid. Money order fraud now permeates real estate, automotive and even romantic dealings.

  1. Verify financial settlement information in real estate transaction. The Internal Revenue Service reports that some mortgage brokers have been caught assisting clients with obtaining mortgage loans through fraudulent means. Understanding how to avoid money order fraud in this setting means verifying tax return information, money orders, W-2s and other income-proving documents before signing on the dotted line.
  2. Authenticate high dollar money orders. It is possible to alter a money order for $35 to read $135,000. Fraudsters use optical scanners and computers to change the amounts. To the untrained eye these figures look properly imprinted, but a call to the issuer verifies that the consumer does not part with expensive goods for little or no money.
  3. Place a self-imposed hold on the funds. Even if the consumer does everything right and carefully attempts to verify the authenticity of the financial instrument, being trained how to avoid money order fraud involves a bit of self discipline. Treat the deposit as though the funds are not truly in the account until the bank verifies that the money order has cleared. This may take a week or even longer, depending on the financial institution.
  4. Ignore the damsel in distress. Understanding how to avoid money order fraud even requires a watchful eye on matters of the heart. The United States Postal Inspector warns that inmates routinely pose as women who take advantage of men in search of pen pal romances. Roping them in to allegedly help in paying their legal expenses by cashing money orders, Romeo soon finds out that the money orders are altered from $1 to read $700. In the meantime, he has paid the money to the damsel’s “friend” who is working with the defense team. He soon faces the double whammy: not only did he lose $700 to the fraudster, but Romeo is also on the hook for $699 to the bank. 

Do not be taken advantage of by ne’er do wells. Become aware of how to avoid money order fraud by taking a close look at the fraud alerts and latest scams. Train yourself to recognize situations that have the makings of a scam and accept money orders only from parties you personally know and trust.

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