The Metropolitan Police has warned the public of a new type of fraud being dubbed 'criminal cashback'.

The new fraud is aimed at anyone who advertises something for sale, be it over the internet, in the local paper, in the specialist press or in a shop window. Average losses are between £3000 and £5000, said the Met.

The scam only works because the victim does not believe there is any risk, due to public misunderstanding of the banks' 'clearing' cycle. People think that once a cheque is 'cleared' the money is theirs, but in fact the bank can take the money back at any time should the cheque not prove genuine.

It’s a case of seller beware

The targeted victim will be contacted by the fraudster posing as a buyer. Whatever the price of the item for sale, the 'buyer' (or their agent/associate) will send a UK cheque or banker's draft for significantly more than the asking price. The 'buyer' will then enter into an agreement with the vendor that this overpayment will be returned to them via 'money transfer' or sent to a third party or shipping agent once it 'clears' in the vendor's account.

The crux of the scam is that the victim does not believe there is any risk in doing this, due to public misunderstanding of the banks 'clearing' cycle.

Once a cheque/banker's draft has 'cleared' it will show in a bank account as a credit and funds to the value of it can be drawn out. However, if the cheque/bankers draft is fraudulent or stolen its value will be taken back out of the account to which it was paid when this fact is discovered. This can be many weeks later.

Needless to say, neither the 'purchaser' nor the agent ever comes to collect the goods you're selling.

The British Bankers Association says there are more secure ways of sending payments than by cheque. The CHAPS system provides guaranteed same day value. If the 'buyer' is unwilling to pay the relatively small cost involved - or to split it with you - then you really do need to be on your guard.

Warning signs to watch out for:

• The buyer wants to distance themselves by dealing through an agent.
• The buyer doesn't want to view the goods before buying.
• You are offered or receive a cheque or draft for more than the asking price.
• You are asked to transfer the difference to the buyer or third party.
• You are being pressurised by the buyer.

• If you are sent a company cheque, check with the drawer that the transaction is genuine. If you receive a bank draft, seek guidance from your own bank.
• Don't be afraid to turn the offer down if you are not comfortable with the circumstances.