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Fake or bounced check? Why the bank doesn't take responsibility for lost money

When you 'cash' a check, you need to wait until it's processed before the money is real.

GREENSBORO, N.C. — Let's say you have something to sell--- a car, a lawn mower, maybe a piece of workout equipment.  A buyer on Craig's List, eBay or Facebook Marketplace meets your price and you take the payment by check and they take the item. It's done.

Then, the check bounces. You're out all the money and they're long gone with the item.

It happened to a Georgia man. He met the buyer in another state. He exchanged his car for a $47,000 check. His financial institution cashed the check, confirming it would go to the car loan, and then a few days later, it bounced.

“You need to call your financial institution and ask them how long until the check clears,” said the man now out a car and $47,000.

That clearing time is key. Stories like this always bring up the question: why did the bank cash it then?

The answer is the financial institution must honor the transaction of accepting the check first. There is no checking of funds immediately, that takes a few days. And that's where folks get into trouble.

“If you decide you don't want to go through that process and you want the money right then, you're going to have to deal with the ramifications later,  whether it turns out in your favor or not,” said Michelle Shanks of Summit Credit Union.

Shanks says every financial institution processes checks using different methods and timing, so you need to know what your institution does. The one thing they all have in common? Accepting a check doesn’t guarantee it’s good.

“Unfortunately, fraudulent checks aren't just personal checks, we've seen fraudulent Cashier’s checks as well,” said Shanks.  

What?!?!? A Cashier’s check is usually the standard. So how do you know if the check is good? Shanks says, go to the source.

“Go to the financial institution with the person buying your item. Have that person get the Cashier's check while they're at the financial institution. Have them sign it over to you, then you turn around and cash it right there at that time at their institution. That's probably the best-case scenario,” said Shanks.

What about cash? Shanks says cash is great, just make sure you have a counterfeit pen on hand to make sure there's nothing funny about the money.

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