Are Money Orders Safe? Security Features and Risks Detailed

Are Money Orders Safe?

Money orders are usually considered a safe way to send and receive money. You do not need a bank account to purchase or cash a money order — they are prepaid (as previously reported) — so anyone who comes into possession of a money order you’ve filled out will not have access to your bank information. This makes them more secure to mail and deliver than checks.

Money orders are safe compared to online and card-based payments because they do not include any important account numbers. Additionally, you typically need a valid ID to purchase or cash a money order; most online purchases lack robust identity verification members.

If someone has access to your debit or credit card numbers or banking information, they can make multiple purchases. However, if someone has access to a money order you filled out, they can only cash it once — if at all. If you fill out the payor and payee information immediately, money orders are safer than cash in that only the payee can cash them. (See our instructions for how to fill out a money order.)

Fraud Protection

Money orders have physical security measures, such as watermarks, that can be verified (as previously reported). These are designed to protect against fraud and forgery.

Additionally, there are maximum amounts for money orders that vary by issuer and agent location, and obvious tampering or discrepancies with the printed amounts can also indicate forgery. For more details, see our related research on the maximum money order amounts at 20+ places that sell money orders.

Traceability

Money orders can be traced much more easily than cash and checks. If you lose a money order, the issuer — such as Western Union, MoneyGram, United States Postal Service (USPS), or your bank — can verify whether or not someone has cashed it. If the issuer verifies that the order has not been cashed, it can stop payment and refund or replace the money order.

A money order issuer can look up the status of the money order using the money order number on the receipt stub. If the money order number or receipt is not available, the issuer may be able to locate the money order using other information. If you purchased the money order at a bank where you have an account, the bank can usually find the money order using your account information.

When a money order is cashed, the check-cashing institution typically saves a photocopy of the endorsed money order (with the payee’s signature). You can request a copy of the endorsed money order from the issuer to determine who cashed it.

Risk of Fraud and Forgery

Money orders are considered cash equivalents and must be handled carefully. Despite security measures, money orders can be faked or altered and subjected to fraud.

When you cash or deposit a money order, it is a good idea to make sure the funds have cleared before you spend the money. Your bank may credit the money to your account immediately or provide you the cash before verifying that the funds have cleared from the money order issuer, depending on your bank’s policy on available funds. For more information, we explain common money order scams and what to do if you cash a fake money order.

Note that if you purchase a money order with a preprinted amount but do not fill in the payee information, the order is exactly like cash. Someone who steals the blank money order can complete it with their own information and cash it. If someone cashes the money order before you notify the issuer, you will likely be unable to obtain a replacement or refund.

How to Report Suspected Money Order Fraud

If you suspect you’ve received a fraudulent money order, you can report the fraud directly to the issuer:

• USPS: Call (877) 786-2455
• MoneyGram: Report fraud online
• Western Union: Report fraud online
• Banks and credit unions: Contact the issuing branch

If you find out that you’ve been given a fake money order and you want to take another step beyond notifying the issuer, you can also report it to the Federal Trade Commission (FTC). The FTC provides two ways to report fake money orders:

• Report by phone at (877) 382-4357
• Report online through the FTC Complaint Assistant
  • Click on “Rip-offs and Imposter Scams,” and then select Fake Checks. Follow the instructions to report your claim.

While the FTC is unable to refund fake money orders, the department will attempt to take action against the scammers.

In Summary

Money orders are typically a safe method of transferring money because they are prepaid, are not linked to a bank account, do not carry any account or banking information, and have watermarks and other security features to protect against fraud. Cashing institutions also require payees to present an ID before they will cash money orders. If you fill out money orders promptly, keep track of them by contacting the issuer when you suspect a problem, and do not cash suspicious money orders, you can use them to reliably send money.

For more about money orders, including where to buy them and how they work, see our money order FAQ. We also explain what to do if you make a mistake on a money order and the ways to send money anonymously.