Short Answer: If you cash or deposit a fake money order and receive the funds, you will be required to pay the funds back to the cashing institution. There are potential fines and legal penalties for knowingly cashing a fake money order, but these don’t typically apply if you didn’t know the money order was fake. For more about cashing fake money orders, as well as information about avoiding money order scams, see below.
What Happens If I Cash a Fake Money Order?
Money orders are considered a secure form of payment since they are paid for upfront and are not linked to a bank account (as previously reported). However, there are, unfortunately, several money order scams designed to make people cash fake money orders. If you cash a fake money order at a financial institution or check cashing store, you must return the funds once the money order is known to be fraudulent.
We confirmed this information by contacting associates at Huntington Bank, Wells Fargo, ACE Cash Express, and Walmart. All locations told us that the cashing institution will contact you regarding the fake money order and request to have the funds repaid. In some cases, even if you didn’t know the money order was fake, you may be blacklisted from cashing future checks and money orders at that branch or store; this is at the discretion of store management.
If you were the victim of a money order scam and cashed a fake money order, then sent the funds elsewhere, you will need to contact the person or company where you sent the funds and try to get the money back. If you are unable to do this, you will still be responsible for paying back the amount of the fake money order.
If the fake money order was an honest mistake made by the sender, once you’ve paid back the amount from the money order, you can request that the person send you funds another way.
If the cashing institution is unable to contact you or you refuse to pay, it may report the fake money order to the Federal Trade Commission (FTC), which can pursue charges. Knowingly cashing a fake money order or check can carry fines, jail time, or both. However, if you truly didn’t know the money order was fake, you will likely just have to pay back the amount of the money order.
What Happens If I Deposit a Fake Money Order?
If you deposit into your bank account a money order that turns out to be fake, the financial institution will automatically withdraw the amount of the money order from your account once it’s been verified as counterfeit. This may happen after the money order has already cleared, since most clear within 24 hours (as previously reported).
Note that some banks charge fees for things like internal transfers and rejected deposits. So, when your bank recovers the funds from your account, it may take more than the amount of the original money order. If the withdrawal overdraws your account, you will be responsible for the overdraft fees.
Banks will usually not close your account due to a fake money order, as long as the funds are recovered. However, if you deposit multiple fake money orders, your account may be classified as high risk, and the bank can shut it down for suspected fraud. For more information, see our research on what to do if the bank closes or freezes your account for suspicious activity.
Avoiding Fake Money Orders and Scams
The best way to avoid the consequences of cashing a fake money order is to do everything in your power not to accept one. In general, you should not accept money orders for more than the amount you’re owed or cash money orders from someone who claims to be unable to do so on their own. You can also ask the place where you are cashing or depositing the money order to verify the funds before you cash it.
When depositing a money order, it’s best to wait until it fully clears before spending the money. This will allow you to easily repay the full amount of the money order if it turns out to be fake. The process can take one to five business days, depending on your bank’s policies. For more information, check out our list of how long it takes deposits to clear at the 50 top U.S. banks.