Someone deposited a bank draft and had the bank manager clear it, but later, the bank draft was reversed. Other people have reported similar incidents many years ago.
Since bank drafts are proven to be an insecure and unreliable payment method, what alternatives exist for people selling high-valu...
@SteveMelnikoff they are a very valid method in the UK due to the ubiquitous use of near-instant transfers. Most of the EU doesn't have that available, or if it is might be on the expensive side, making it worth it only if the value is particularly high.
Uh... Bank draft. Meet at bank? That is so old-fashioned. If I need to make a large payment to someone else I just transfer the money from my bank-account straight to his using the bank-app on my phone. He checks his own account that it appears and the deal is done. On very high amounts (over 2500 euro) I may have to temporarily raise my daily transfer-limit, which I can do via the same bank-app (takes about 10 minutes to process). I haven't seen/used a bank-draft or cashier check in 30 years. They were completely phased out here some 20 years ago IIRC.
@JarrodChristman A cashier's check has the exact same problems as the bank draft described in the story (and I think it might be effectively the same thing?) A real cashier's check is guaranteed to be good, but if the check is a forgery you will still be out the money. It doesn't matter what your bank tells you; they won't know for sure it's a forgery until it's refused by the issuing bank later. There's no paper instrument that can avoid the problem of forged instruments.
@KateGregory "high-value" would be items above $5,000 (such as the $10,000 watch sold by the victim in the news article), which exceeds the typical $3,000 Interac limit. Also, Interac transactions can be reversed in fraudulent cases: reddit.com/r/PersonalFinanceCanada/comments/nbhzs4/… Since the seller cannot be sure that the buyer is not using stolen funds, it is not secure.
@SteveMelnikoff Can "direct bank transfers" be reversed, for example, if the buyer is using stolen funds to pay the seller? Interac has this vulnerability.
@user4574 couldn't the escrow service also scam by taking the money and disappearing?
@user4574 Bitcoin has the issue of volatility and quickly changing exchange rates assuming the seller wants to get a specific amount of Canadian dollars for an item, but I guess this protocol would otherwise work: 1) Buyer and Seller meet in person. 2) B transfers BTC to S. 3) They wait an hour for the transaction to be confirmed (6 blocks deep). 4) S gives the item to B.
This protocol might also be possible with gold: 1) Buyer B and Seller S meet at S's choice of gold expert. 2) B gives the gold to S and has the expert verify that it is real. 3) S gives the item to B. (if the verification fails, return the gold to B) 4) end (B will no longer need to prevent S from escaping at this point)
It's worth noting that PayPal was created originally as a escrow service specifically to address this issue for eBay, as part of eBay's original goal of permitting collectors to find and sell to/buy from each other. That could involve some moderately expensive items, and an escrow service provided a safer way to exchange the money by offloading the problems to the service. Of course its function has evolved over time.
@GlennWillen "There's no paper instrument that can avoid the problem of forged instruments." True in practice, but only because banks are slow and uncoordinated when it comes to technology. There's no technical problem stopping them from putting QR codes with cryptographic signatures of the contents on bank drafts.
@Vaelus - Even if there was a cryptographic signature on a cashier's check, you still have a forgery problem. If I get 1 $10,000 legitimate cashier's check but I forge 9 duplicates, all 10 checks would pass cryptographic inspection. It wouldn't be until the issuing bank tried to clear checks 2-10 that they would discover the scam.
Cash. I've purchased numerous used cars with cash, anywhere from $2500 to ~$10000, from both private sellers and from used car dealers. Never been a problem with cash.
Discussion on question by Victor: How…
Discussion on question by Victor: How…