Homestay Hosts Overseas Cheque Fraud Awareness

Fraud Awareness - Foreign Cheques Nov 26th 2019

There have been some recent cases of overseas cheque fraud / attempted fraud that we are aware of and want to make sure our Homestay hosts should be aware of.

What to look out for A common scenario might be whereby a seemingly genuine visitor will request to book a Homestay and pay using an overseas cheque. Sometimes they will even insist on paying not just the deposit, but the full amount, or even an overpayment, sometimes claiming they wish to avoid multiple bank charges or exchange rate fluctuations. They may appear a little keen and chase you for confirmation you have received their cheque OK and deposited it into your bank account.

Some banks value immediately It is not uncommon for some banks to treat overseas cheques in a similar way to UK cheques and credit your account in just a few days, but you need to be aware, they can still reclaim the money if the cheque later bounces.

How foreign cheques are cleared There is no overseas cross-border cheque clearing system. Foreign have to be sent abroad to the bank where the payer holds their account. This process often takes several weeks and can be expensive as it is done on a cheque-by-cheque basis.

If further down the line the cheque ends up ‘bouncing’ (lack of funds, stolen or fraudulent cheque), then your bank will legitimately reclaim the funds from your account.

Where’s the scam? The potential ‘scam’ occurs when the ‘visitor’ who has sent you the foreign cheque gets in touch, usually after a couple of weeks, asking you to either: • Repay or forward the overpayment to their ‘agent’ or • Refund their money as they need to cancel their booking, (often with some heart- rending story of severe or terminal illness)

The problem arises when you, (thinking you have received the funds from the cheque) make a payment, usually by bank transfer refunding their money.

A few weeks later, you are shocked to find you’re out of pocket with 2 debits from your bank

The fraudster now has your money all nicely laundered, probably using a virtually untraceable pre-pay debit card, leaving you with a dodgy cheque and no way to recover your money or any costs incurred.

Cross-Border Foreign Cheques FAQs More helpful information on Cross-Border Foreign Cheques can be found online here https://www.chequeandcredit.co.uk/information-hub/faqs/cross-border-foreign-cheques

Take steps to protect yourself Not every overseas cheque is a fraudulent payment. Before accepting a foreign cheque as payment, check what fees and exchange rate your bank will charge and take some simple steps to protect yourself.

Overpayments If someone sends you a payment for more than the required amount, this should set the alarm bells ringing.

Check with your bank. When paying an overseas cheque into your bank account, always ask how they treat it, what fees are involved and when the cheque will be a fully cleared payment without recourse. In the case of cheques drawn on banks in the US, funds can be recalled any time up to six years after payment to the receiver has been made!

Before you refund any money Check with your bank that the overseas cheque has been fully cleared by the overseas bank and check the sort code they provide. Take a moment to look it up and see where you are being asked to send the payment. You can check online at http://www.fasterpayments.org.uk/sort-code-checker

Offer an alternative The safest method is to ask visitors to pay you by Bank Transfer / Direct Credit straight into your bank account, by providing them with your own bank details i.e. account number and sort code.

PayPal is another safe way to receive money. If you have a PayPal account, simply ask your visitor to make a friends and family payment using your email address or phone number.