Bankers Draft??

[David_J]

Well done to Nick2 on selling his boat. (Earlier Post) He mentioned a bankers draft for payment which I always considered rock solid safe. I am sure they are but do I recall some scam way back where even a genuine draft could be rejected at payment into your account. Memory suggests it was a situation where money may be in the purchasers account at the time the draft was raised but funds were somehow taken out by the time the draft went through the bank system so could not be paid into your account. Was this a scam or is my memory playing games?
Then were there stories in the papers more recently that electronic transfers could be snatched back by the banks. Or is that another dream? So if there was anything in any of these memories, how do you take payment on such a high value transaction and be guaranteed the dosh does get into your hot clamy hand?

 

[Planty]

[ QUOTE ]
Then were there stories in the papers more recently that electronic transfers could be snatched back by the banks. Or is that another dream?

[/ QUOTE ]

Can't say about bankers draft but have had a very near miss with the above where we were paid a cheque by a corporate Client that days after us banking it went pop big style, owing the banks a fortune, but they banked with the same bank as us. Fully Cleared balances were showing on our electronic banking system however our branch tried to tell us, just after the Customer announced going pop the cheque hadn't cleared. 5+ working days after depositing it !!!! and that they were about to snatch the money back. Thank God we got it transferered out to another bank (business partners private account) before they did!

They never tried to contest this or ask for the money back, so what was going on there then?? Paul

 

[plombier]

The only time that I used a Bankers Draft, the money was taken from my account the moment the Bank handed me the Draft. I think you actually buy the Draft from the Bank (like a very big postal order) so they get their money up front.

 

[Deleted User YDKXO]

Banker's drafts can be forged which is quite a common scam which is why Nick2 did right to present it to the bank asap for authentication but I've never heard of genuine drafts not being honoured. The point of a bankers draft is surely that it is, in effect, a cheque drawn on the bank's account not the customer's account. Whenever I've arranged bankers drafts for my own use, I've noticed that the money is debited from my account on the same day so I dont see how your scam works
But I have heard one or two stories about electronic transfers being retracted so I guess it makes sense to hang onto the boat for a couple of days afterwards but that could be very difficult if the buyer has seen the money go out of his account
I suppose no financial transaction is entirely risk-free so its a case of trying to minimise those risks. I certainly wouldnt accept cash for a boat. There is the possibility that it is counterfeit (I was once given counterfeit £50 notes by a reputable British bank btw) and, these days, it seems impossible to deposit large cash sums in a bank anyway

 

[jac]

I'm a Manager with one of the big banks so can hopefully give you an informed answer!!

A genuine bankers draft is guaranteed funds. The issueing bank will take the payees funds and only then write the draft. However - it is still technically a cheque so has to go through the clearing system.

The problem for most people is how do you tell a genuine bankers draft? Forgeries can be made and most people would probably see so few drafts that they they wouldn't know. Its also not unknown for draft books to be stolen.

The only way round this is to check with the issueing bank that they did issue the draft. You'll need to find out which branch it was ( will be on the draft) and contact them.

Unpaid cheques can come back after 3 days - so although they are cleared they are not paid. The problem lies with the post. A cheque gets back to the payees bank ON day 3 - they then post it back 1st class to beneficiaries bank. As long as they post it by end of day 3 OR ring by 12 on Day 4 then it is a valid return. As you can imagine - if it gets held up in the post for 2-3 days then it coule be day 6 before the funds go back out of your account.


Only safe way is via CHAPS. Will cost about £20- £25 and is only available weekdays but when your bank have the money its secure and you can release the goods.

Its the only form of payment I would accept when selling.

 

[Its_Only_Money]

On drafts I have used to send funds in the past the funds have been withdrawn from my account (and put into the banks funds) on issue of the physical draft.

Like any other cheque they can be forged, however, and because most people don't handle many they are not easily spotted. I now avoid taking drafts and for any substantial funds I insist on a wire transfer.

On the last draft I was sent it had been lost/diverted in the post and had been paid into an account in 3 days from issue - and this was a draft that supposedly could only be paid into an account in my name!

For typical boat sums I don't see why wire transfers shouldn't be used just as for house buying - the fees are similar - and once in your account you can always get the bank to state if/when the funds are irrevocably yours.

 

[powerskipper]

ask him to close the window!!!!! boom boom

 

[longjohnsadler]

boom boom.
Isn't that two windows?

 

[StellaGirl]

I had a draft "bounce" on me once. Wouldnt trust them at all. You might as well write a cheque.

 

[MART1N]

As previously stated, biggest risk is forged draft or building society cheque.

I always confirm with issuing branch before accepting, but on a large transaction (like Nicks) would probably have accompanied to bank as well.

I always wondered though, what if someone got a real cheque then forged an exact copy and handed that one over instead. In theory, they could then return the original and get the money back.

 

[Its_Only_Money]

[ QUOTE ]
As previously stated, biggest risk is forged draft or building society cheque.

I always confirm with issuing branch before accepting, but on a large transaction (like Nicks) would probably have accompanied to bank as well.

I always wondered though, what if someone got a real cheque then forged an exact copy and handed that one over instead. In theory, they could then return the original and get the money back.

[/ QUOTE ]

Forging a draft made out on your own behalf is surely like a financial homing missile - unless you intend to skip the country or stage your own death too???? /forums/images/graemlins/laugh.gif

The danger with drafts is accepting one in good faith and then finding it won't clear for any reason (not just fraud).

Also I think sums in excess of 9000 in cash are subject to the money-laundering regs aren't they? Which is prob why banks have difficulty accepting them....?

 

[MART1N]

Exactly - if someone was planning to skip the country (or had access to someone elses pass book/account etc), they could get one cheque which buyer confirms details. Then seller gives buyer fake draft and returns to bank with original later or next day, tells bank sale fell through and could they please reissue new draft in new name etc.

Draft would not bounce under normal clearing for at least a couple of days, giving opportunity for a couple more fraudulent purchases.

Plenty of people flee debts already in their names anyway so surely some might try to go out in style!

 

[Dipper]

I have been paid a few times by bank transfer from foreign banks and each transfer has been accompanied by a letter from my bank saying that the transferred funds could be withdrawn by the issuing bank up to close of business either the day of transfer or the following day - I can't quite remember which. So if the purchaser is exhibiting undue haste after payment by bank transfer perhaps the seller should be wary.

 

[Nick2]

The reason that I felt safe in accepting a draft was mainly because I was present with the buyer of my boat at the local (to the boat) branch of his bank when the draft was made up. I was happy that there was no 'slight of hand' because I saw the draft being handed to buyer and then to me.

.....just hope that my buyer was not a member of the Magic Circle....


Nick

 

[Its_Only_Money]

David, the only point I'd add is that fundamentally you handed your boat over without cleared funds being received, if you had been the deberate target of fraud then it is quite possible the forgery would be good enough to not be spotted by you or the cashier and the necessary sleight of hand would be practiced too.

As above I would only go with a chaps xfer - minimals cost difference and no need for the unecessary interim and open to forgery piece of paper. I'm sure 99% of transactions would go ok but if you are the 100th then its a lot of money to lose - and noone else will bear the loss for you I suspecr.

 

[Nick2]

Agree with you Simon except surely as the bank actually makes up and gives the draft then if this process is in our view how can the draft be forged? (because its coming from the bank person rather than the buyer)

I am sure that there may be a flaw in this somewhere but I don't think its a bad way to transact.

I know it sounds sad but I have found this debate on bankers drafts interesting!

Thanks

Nick

 

[Its_Only_Money]

Nick - it is just that getting the funds into a paper format that comes outside the banking system while physically moved between banks is an unecessary additional risk that doesn't even represent a cost saving over chaps. I would take a chaps transfer + a statement from the bank on time period for the funds to be secure as the most secure method - remember house purchases are dealt with in this way by solicitors handling other peoples money....never met a house-buyer yet who wanted to do by bankers draft!

Also worth remebering that for any additi nal risk element in the transaction someone, somewhere gets taken by a fraud aimed at that particular weakness....