Can I Verify Funds on a Money Order to Avoid Scams?
A little due diligence can help you avoid a costly money order scam
Getting paid with a money order is similar to getting paid with a paper check. You don’t get cold, hard cash, but you can deposit or cash the item at your bank. Assuming the payment is legitimate, you'll eventually have money to spend. But if you deposit a bad money order, you could lose money or merchandise, be charged fees by your bank, or even face legal troubles.
There are multiple ways to verify the money order is legitimate before depositing it.
Why Verify a Money Order?
When you verify a money order, you make sure that the money order funds are really there. But is this due diligence necessary? After all, money orders are like prepaid paper checks—to purchase one, the buyer has to pay a money order issuer upfront with cash or another guaranteed form of payment, plus a small fee.
However, money order recipients are often a target of money order scams. These scams generally involve a fraudster sending the recipient a fake money order—commonly a counterfeit money order or a money order that has been tampered with. For example, a scammer might send you a forged money order to extract free merchandise from you. Or they might send you a fake money order with an amount that's higher than you expected and then ask you to return the excess with your own legitimate funds, which they will pocket and then run.
This is because your bank's funds availability policy may automatically let you spend the money you deposited from a bad money order, leading you to believe that the payment cleared. But if your bank discovers it was a fake, it will recover the funds, which you might have already spent.
As a result, you could incur a negative bank account balance, which could lead to fees from your bank. Because it can take the bank over a week from the time you deposit it to alert you to the fraud, it's best to hold off on spending any portion of a money order for at least a few weeks.
Verifying a money order can help you avoid money order scams and the associated damage. There are several ways to verify a money order and avoid money order fraud.
Do you suspect a scam and haven't yet cashed in the money order? You can usually cancel the payment with the issuer before you deposit it, but it will come with a fee.
Contact the Issuer to Avoid Money Order Scams
Just like with checks, you can attempt to call the issuer and find out if a money order is good (and if the amount is correct). This won’t give you 100% certainty that your money order is good, but it will help you quickly identify obvious scammers.
How to Verify
Call the issuer at a number you know is legitimate (from the list below or from visiting the issuer’s website). It's important to obtain the number independently and not from the person who gave you the money order, as if it’s a scam, you can be sure that the number goes to a thief who will tell you that the money order is good. Also provide the money order serial number, the date issued, and the amount of the money order, and ask for any available details.
Who to Contact
Call the organization that issued the money order. In some cases, that's a bank or credit union. If it's not clear where the money order came from, you can call a number on the money order just to ask for that information—and then verify the phone number online or call back using a number you find yourself. Grocery stores and convenience stores often use money orders issued by Western Union or MoneyGram.
- Western Union: 1-800-325-6000
- MoneyGram: 1-800-926-9400
- U.S. Postal Service Money Order Verification System: 866-459-7822
Cash Is the Safest Option
The best way to make sure you don’t fall for money order scams is to cash a money order directly with the issuer instead of your bank. For example, if it’s a USPS money order, take it to a post office that handles money orders. This can be a challenge, as post offices might not have sufficient cash on hand and some stores that sell MoneyGram and Western Union money orders will only cash money orders sold by their chain.
Look for Physical Clues of Money Order Fraud
Sometimes, you can tell that a money order is fake just by looking at it.
Most money orders have security features like watermarks and a special ink that will run or change colors if anyone tries to change information on the money order, such as the amount. You might notice discoloration on areas of the document that someone tampered with. In addition, look for a dark strip across the top of Western Union and MoneyGram money orders that describes the security features. If you're not familiar with these security features, go to a store that sellers money orders from the same issuer as yours and ask someone on staff who sells money orders to inspect it.
As a precaution, check the amount. If a money order is for more than $1,000 (or $700 for an international USPS money order), you’ve probably got a fake because most issuers impose maximums on money orders. The amount should be printed in numbers and written out in words. Here are security features on common money orders.
- USPS money orders have a watermark of Benjamin Franklin that can be seen when you hold it up to a light and a thin line running from top to bottom with “USPS” printed in small letters.
- MoneyGram money orders have a watermark that can be seen when you hold it up to a light and a heat-sensitive logo (or “stop sign”) that changes color when you hold your finger over it.
- Western Union uses a watermark and ink that will run if the document is altered.
Watch for Behaviors That Tip-Off Money Order Scams
Consider why you obtained the money order and how the interaction has gone. Look for these clues to find suspicious senders and avoid a money order scam:
- Serious buyer: If you’re selling something, does the buyer seem like a serious buyer who is informed about what they're purchasing? In a money order scam, the sender may seem eager to send you money.
- Only money orders: Have you asked for different forms of payment and gotten a (flimsy) list of reasons why a money order is the only option? Note that fraudsters can also rip you off with popular electronic payment tools as well.
- Overpayment: Did somebody send you more money than you asked for (and they want you to send the excess back by wire or Western Union)? It’s probably money order fraud.
- High pressure: Everybody wants their merchandise quickly—that’s not unusual. But if you feel especially pressured to send something when you’re not sure the payment is good, it could be a sign of a money order scam.
Take a Multi-Pronged Approach
Trying to verify a money order to avoid money order scams is often frustrating. In most cases, money order issuers will only tell you if there is a known problem with the money order in question. But a thief can give you the same money order he gave to 100 different people, and it’ll take some time for that item to show up in the system. What’s more, a thief can buy a legitimate money order for $1 and then change the amount to a higher number.
It’s important to verify a money order through a combination of the approaches above. Contact the issuer, look for physical clues of counterfeit or tampering, and get to know the behaviors of fraudsters so you can prevent a money order scam.