If you're like me I have always thought of money orders as the same as cash.  I almost learned an expensive lesson that taught me they are not.  This did not happen to me on eBay...but it could have!  Before I explain how money orders work I need to tell you one of the wildest things that has ever happened to me.

Classified Ad

I ran an ad to sell a 27" Panasonic TV/DVD/VHS combo unit. I did not list it on eBay but that is another story.  This item was listed in a regional free classified paper that also places their ads on a national on-line classified network.  This TV had been listed for about a week when I received a call regarding the sale of the TV.

The caller identified herself as an AT&T operator who had someone placing a relay call.  Now, I had never heard of a relay call and I told her so.  She explained it was a call from a hearing impaired person who would type the conversation and she would relay the caller's message to me.  I would then respond and she would type my response for the caller.  I explained to her that I did not know anyone who was hearing impaired and she asked if I had a TV for sale.  I said I did.  The conversation went back and forth, but the essence of the call was a man in Illinois (I live in Alabama) wanted to buy the TV.  He said he would send me a money order that would include the cost of his shipper to come and pick up the TV and ship it to Illinois.  He also indicated he was in a hurry because he was leaving the country on a mission trip.

I admit this all sounded strange but I kept thinking "I can't get hurt.  He has not asked for any personal information, nor any financial information."  He did ask me to send him a picture of the TV by e-mail.  Which I did and he e-mailed back a reply that it was just what he was looking for.  He would send an American Express money order the next day.  Almost a week went by and no money order so I thought it was a crank call.  Then on a Friday afternoon Federal Express showed up with the money order.  Now it wasn't just a money order...it was 2 money orders totaling $3,000.  I was to keep $400 and wire $2,600 to his shipper.  About 5:30pm I received a call from a man who said he was the shipper and he would e-mail me instructions for wiring the money.

I received the instructions and left for the grocery store thinking they would cash the money order and I would keep the $400 and wire transfer the balance of $2,600.  The customer service people at the grocery store told me they could do the money gram (which is a money order through Western Union) but they could not cash the ones I had.  Fortunately my bank was just across the street and I had just enough time to get there and cash the money orders.  I rushed to the counter and as the teller was starting to cash the money orders I remarked that they would not believe this entire story and said I needed to cash them in order to send a money gram to Nigeria.

Fortunately, the branch manger was standing there and said...Whoa!  Don't do that.  There is a Nigerian scam going around and those are probably counterfeit money orders.  I'll hold her explanation of how money orders work for just a little later.  We took the money orders into her office where she examined them.  She said I am almost certain these are counterfeit.  She called American Express and they confirmed they were counterfeit.  The money order number (similar to a check number) was valid except it had been cashed in September 2005 and it was for $40 not $1,500.  Same story with the second money gram.  By now I was beginning to feel really dumb.  So, I asked her how I could possibly have a problem since money orders/money grams are the same as cash.

Lesson

That's when she explained that they are not the same as cash.  When you cash a money order they write your checking account number on the back.  It can take up to a month for a counterfeit money order to clear the system (these have a bad routing and transit number and a bad account number).  When it finally surfaces as a bad money order - guess what - the bank charges your account for the entire value of the money order.  Surprise! I would have been out $3,000.  Oh yeah, one other thing I learned - American Express does not issue money grams in foreign countries.

My Advice

If you accept money orders as payment for merchandise sold on eBay have your financial institution look at them closely.  Deposit them as you would a check and wait until you have confirmation that they have cleared the banking system. If you do not heed this advice you could be the next person to be scammed!  You would not only be out your merchandise but you would be out the value of the money order!  I will continue to accept money orders as a form of payment, if they originate in the United States, but I will hold them until I know for a fact that they are valid. Only then will I ship any products to a buyer.  And one other thing, if they want to send you a money order for more than they owe and ask you to forward the balance to another party - don't even accept the payment and cancel the sale.  Good Luck - Be Cautious!

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Thanks for reading my guide,

Skip Neff