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Cash that Check - Go to Jail
[November 09, 2006]

Cash that Check - Go to Jail

President and Editor-in-Chief
Originally posted on Rich Tehrani’s VoIP Blog

Apparently it is becoming increasingly possible to go to jail when you receive a fraudulent check. This can happen when selling products on Craigslist and eBay (News - Alert).
An article in the San Francisco Chronicle explains that resident Matthew Shinnick tried to sell a pair of mountain bikes on Craigslist late last year. He attracted a buyer, received a check in the mail—and ended up handcuffed by police in a downtown Bank of America branch and jailed for almost 12 hours.

Shinnick, it appears, was a victim of the classic “Nigerian 419” scam, adapted in this case to sucker in unwary Craigslist users.

Typically, the scam involves a bogus check being sent by a fraudster as a part of a transaction. The transaction is subsequently canceled and, before the bank has spotted the check as a phony, the fraudster requests some or all of his money back—money that the victim unknowingly pays out of his own pocket.

Shinnick said he wasn’t aware of the scam while he was negotiating to sell his bikes -- his first foray onto Craigslist. But he was made suspicious by the unexpectedly large payment.

Shinnick said he’d spent about $14,000 clearing his name. He wanted that money back and he felt Bank of America, the bank who reported the fraudulent check and had him arrested, should pay it.

BofA felt otherwise. Earlier this month, a bank vice president, William Minnes, wrote to Shinnick’s lawyer to say that “Bank of America can certainly understand that your client is angry at the bank.”

However, he said, BofA has no legal liability in the case because of a 2004 Supreme Court ruling. Minnes warned that “litigation would not prove financially beneficial” to Shinnick.

Minnes was referring to the 2004 state Supreme Court decision that shields institutions and people from liability when reporting suspected crimes to the police.

Certainly this is an extreme case, but this problem could become increasing annoying to customers selling products online. It would seem that the government and police should become more familiar with this sort of problem and not arrest first and ask questions later.

As far as Bank of America goes, despite articles to the contrary, what choice does the company have? They are legally obligated to report illegal activity. Still, perhaps banks to become aware of this problem and proactively work to solve such cases before all of their customers migrate over to PayPal.

Rich Tehrani is President and Group Editor in Chief at TMC. In addition he is the Chairman of the world’s best attended VoIP event, Internet Telephony Conference & Expo.

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