At one time banks would credit the money from a deposited check when it finally cleared. If they credited it early they were on the hook if it was bogus.
Then banking rules set a guideline (promoted by banks bewailing the cost of semi-manually recording each step) allowing banks not to check on the actual date each check cleared but to go by “average plus”. So they could effectively not credit checks that had in fact already cleared. Gaining a few days float.
Then banking rules set a new guide line (promoted by public interest groups) to require that banks not get all that float, but would have to credit $100 immediatedly upon deposit, and another $100 each day and then the whole amount whether it had really cleared the issuing bank or not. In return for this “favor”, they got to wash their hands of checks, so bogus checks were now the responsibility of the depositor.
Now scammers use this loophole as described in this thread Is this a scam?
So, now that banking is all automated and banks can do all this stuff without manual paperwork, why can’t we just go back to the original method. That bank balances reflect the actual flow of money, so bogus checks never appear to have cleared when they haven’t.
Why can’t this work?
Because too many people complained about the charges they got for bouncing their own checks when this was the case.
People were writing checks on deposits that had not cleared, thinking they had the money to cover those checks. Oops. The checks they wrote were hitting the bank before their paycheck cleared. $30 a pop overdraft fees can run into big money REAL quick.
You may be confusing two payment methods. Personal checks often (depending on jurisdiction) have some hold put on them, which may or may not cover the time it takes the check to clear. Bank clearing of personal checks is a very quick and efficient process, and in the past, by denying access to funds, banks were able to use your cash to make money for them without any benefit to you.
Scammers tend to use a money orders. Because cash must be presented up front, many feel these items are as good as cash. However, like anything else, money orders can be lost or destroyed, so there is a mechanism to obtain a refund. Scammers will present a money order, obtain a refund, then present the stopped money order, which is claimed to be “as good as cash.” They’ll do this over the mail, else a seller could say “fine, get me the cash then.” Not all money order clearing is as quick as it is for personal checks.
The problem is that the percentage of money order transactions that are not fraudulent is immense as compared to the scams. Quite frankly, I’d rather not 99 people be inconvenienced to prevent 1 from being scammed. We (US) do this to often. There are better ways to address the scams.