Overpayment Scam Alert

Overpayment Scam Alert

Public Service Announcement for our Members from the Strait Area Chamber & BMO

Protecting Small Businesses From Financial Scams


There’s a new a legit-looking financial scam on the go that is targeting small businesses. It was brought to our attention by one of our Members that they were recently targeted by an “Overpayment Scam.” They received a call from a person asking to quote services for their new home (which was in reality a house listed for sale online). After the quote was approved, the “client” mailed a forged bank draft/cheque as a deposit for the upcoming service with a much higher amount than the one agreed on. The “client” excused himself and said it was a mistake and that the Member could simply deposit the cheque and a driver would come over to pick up the remaining amount in cash. They even offered an extra $100 for the business to keep as compensation for their trouble – how generous, right?!


The whole transaction was a scam. Although it could have been interpreted as a simple mistake, thankfully it raised red flags with the business. So, when they took the bank draft/cheque to the bank, they asked the teller to look into the matter and they found that the document was indeed forged! Thanks to the diligence of the business and the keen eye of the teller, no monetary loss incurred in this incident to Member’s business. But in the busy schedule of running a growing business, the result could have been different because the cheque was such a high quality forgery. Unfortunately, this is scam is becoming increasingly common in Canada and in the US, so all businesses should be aware and take precautions to ensure they don’t face any losses.

The Canadian Bankers Association (CBA), mentions that “in addition to receiving a fraudulent cheque or money order, the seller may have already sent the scammer the item that was for sale. Add this to the funds the seller “refund” the scammer, and this scam could prove to be costly.” The page also points out a few tips to help ensure you don’t become a victim of this scam:

  • Examine money orders, bank drafts and cheques closely.
  • Beware of buyers who send more than the agreed amount of money, refuse the payment and send it back to the buyer.
  • If you are suspicious of a money order, bank draft, or cheque, do not deposit in your bank account. Take it in person to the bank for clarification and file a report with the RCMP if deemed necessary.
    Instead of a cheque or money order, request a certified cheque. Robyn Young, Customer Relationship Expert at BMO, states that “A certified cheque could also be fraudulent, and the bank would still be calling to verify this at branch level.”
  • Remember to treat a money order like a cheque; these funds are not the same as cash and must be cleared and settled the same way that a cheque clears and settles. Young explains that, “most money orders and drafts, should have a protecto-graph mark for the dollar amount, which means it’s been impressed into the paper. Your branch will almost always call the source branch to ensure that the draft/money order is legitimate.”

To find out more about recognizing fraudulent cheques and money orders, visit this link.

An important thing to note is that a cheque or money order is a payment agreement made between a buyer and seller – the bank processes the payment but they are not involved in the agreement. With money orders, that means that you are solely responsible for the items you deposit in your bank account; if the item is returned as fraudulent, you, as the depositor, are liable for the full amount. So if you’re in doubt, or if the situation seems unusual in any way, find another buyer.

Many thanks to our financially savvy member and to BMO for protecting the interests of small businesses in the Strait Area! #membershelpingmembers #chamberfamily



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