Legal Question in Business Law in Tennessee

Re: Transfering Funds

Be careful that it is not some scam to get you to incur liability by sending a wire transfer based on bad funds. Here is how a typical scam can work.

1. Your client tells you that he needs help in getting payment from the states. Ususally the client is located in China, India or an African country.

2. The client tells you that his customer will send you a "certified check".

3. You are to wire him the money immediately as the certified check is "good funds."

4. You get to keep a large percentage of the check 10 or 20% for your trouble.

5. The customer sends you what appears to be a certified check. You deposit it to your account and immediately wire out the money to your client.

6. The customer stops payment on the check.

7. Your client gets your money and you get stuck with bounced check charges or lose the money if you had enough cash in your account to cover the wire transfer to your client even without the funds from the customer. If you did not have sufficient funds to cover the transfer in your account, the bank will look to you to make up the difference. In other words you will owe the bank the money. The bad guys will get off scot free.

Be very careful. Your bank will not take responsibility if you are the victim of this kind of scam. Many instruments appear to be "good funds" but there is no real way to transfer money that fast without some risk.

If your client wants you to transfer him money before the customer's check has time to clear, 5 to 10 days, then be very suspicious.

Do not trust your bank. If you ask, "is the money in the account" and they say "yes", they may not really mean what you think they mean.