12/16/2022
In this digital era, traditional forms of payment that are known to offer a certain guarantee for those who decide to use them still prevail. In this category we find the certified check, which should not be confused with a cashier's check.
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Due to its validity, we will show you its relevant aspects and clarify the most frequent doubts.
What is a certified check?
It can be said that a certified check is an official convertible note that is endorsed by the financial entity that issues it. This means that it has passed an authentication and verification process established by its internal policies.
Even if the money comes out of your checking account, the institution endorses the payment even if you do not have sufficient funds.
Similar to a cashier's check, the certified check is used to make large payments that you don't want to make online or by personal check.
These securities bear your full name, checking account number, the word "accepted or certified" and the signature of the person in charge of the bank.
Where to get a certified check?
Ordering a certified check is as easy as using the ATM. You simply go to a branch of your bank, credit union or savings institution to do the procedure. But you need to check beforehand that the branch you visit can issue these instruments, otherwise you will have to go to another one.
For the elaboration of the check, you will need the exact information about who it is addressed to: a private person or a company. The certification usually has a fee included, ranging from $2 to $5 each time you make this request.
When they finish verifying your identity, the corresponding funds in your checking account are frozen and only the person who cashes the check can use them.
Differences from a cashier's check
It is not uncommon for people often confuse certified checks with cashier's checks. They are certainly very similar instruments, since both are endorsed and signed by those in charge of the financial institution.
The slight difference has to do with the origin of the funds:
- With a cashier's check, the money is taken by the bank from your savings or checking account and transferred to its own account. This is the information that appears when it is issued.
- With a certified check, the funds are debited directly from your checking account, so when you print it, it shows your name and account number.
On the other hand, as long as the credit instrument you receive is not a forgery, cashier's checks are considered more secure. This is related to the fact that the bank or credit union that backs the instrument covers you in the event you do not have sufficient funds.
What happens if you lose a certified check?
One of the advantages of the certified check is that it has protection in case of loss, theft or destruction. When you receive a certified check in your name, if any of the above situations occur, you must first contact the bank that issued the check to cancel it.
You will then need to enter a statement of loss. This can be done by the person who signed the check or by the person who received it. The law states that after 90 days from the time of certification, the responsible financial institution must release the funds to the appropriate party.
Potential fraud problems with certified checks
To illustrate what can happen with a counterfeit certified check, let's use a hypothetical but common situation. Let's assume you are selling a jet ski on a major online shopping portal and someone contacts you to finalize the deal.
This person you don't know gives you a certified check that looks official to pay you for the item and you accept it without verifying its origin. Days after you deposit it, the bank notifies you that the check is fake. You are left without the money and without the jet ski! You want to die.
Although the law requires financial institutions to make these funds available to you the next business day, it does not mean that the check is legal. In fact, the Federal Trade Commission (FTC) reveals that it can take weeks to uncover a counterfeit check.
To avoid these types of scams, here are 3 tips:
- If someone asks to pay you strictly with a certified or cashier's check, suggest they use an escrow account.
- If you unexpectedly receive one of these checks, try not to deposit it. It is a notorious fraud that takes advantage of the weakness for prizes.
- If you decide to accept this form of payment, the safest thing to do is to accompany the payer to the bank to verify the issuing process.
Certified checks are an easy way to pay or receive large amounts as long as you take precautions. There are many ways to make these transactions and Busconomico will show you how they work.
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