Cashier's Check Pros and Cons
Many, but not all, sellers on eBay and other online auction sites will accept a cashier's check from a winning bidder. Cashier's checks are checks that have been issued and certified by a bank. A cashier's check cannot bounce, because the money already has been deducted from your account and placed in an escrow account. When the seller cashes the check, the money is paid from the escrow account.
The Plus Sides of Cashier's Checks
Historically, cashier's checks have had a “good as gold” reputation. In the online auction world, cashier's checks have often been regarded as one of the safest ways to send a payment from Buyer A to Seller B because:
Cashier's checks can provide a record of purchase.
Cashier's checks can be traced to a particular mailing address.
Payments by cashier's check can be covered for up to $200 (minus a $25 processing fee) through eBay's Standard Protection Program.
Cashier's Check Cons
Unfortunately, there also can be some significant drawbacks to paying with cashier's checks.
You have to go to a bank to get a cashier's check.
You may be required to open an account at the bank, if you don't already have one.
You will likely have to pay a service fee to get the cashier's check issued.
Cashier's checks are very slow to clear.
Paying with a cashier's check will typically provide no time advantage over paying with a personal check. Federal Reserve Regulation CC requires that the money from a cashier's check must be made available to the recipient within two banking days of deposit. Unfortunately, after the payment is made to the seller, the cashier's check still may require at least two weeks, and possibly a month or longer, to complete the clearance process. Your purchase may not be shipped until the seller is certain the cashier's check is good. And there is a very good reason he may stall: counterfeit cashier's checks.
Hocus Bogus
Counterfeiters have learned how to take advantage of the long gap between when a cashier's check is paid and when it actually clears, and online auction sellers have been some of their prime victims. The crooks bid up the price on an auction item so they can win it. Then they pay the delighted but unsuspecting seller with a counterfeit cashier's check. The counterfeit often is so convincing that it may not be unmasked in the banking system until weeks after the seller has deposited the money and spent it. Suddenly, she will get a demand from the victimized bank to pay them back. And the seller likely will find herself caught up in a police investigation.
The use of counterfeit cashier's checks is on the rise, according to law enforcement agencies. Buy cashier's checks only from financial institutions that you personally know are reputable. In recent years, criminals using counterfeit cashier's checks and fake bank Web sites have scammed many online auction sellers. The bad checks can be “verified” online by the unsuspecting recipient.
The ongoing problem with counterfeit cashier's checks may cause you to encounter an increasing number of online auction sellers who will refuse to accept these once-trustworthy payments — and it would be difficult to blame them. Trained personnel at banks often have a hard time identifying a bad cashier's check. How can an individual auction seller be expected to do better?
