Do you know everything about Demand Draft?

What is a Demand Draft?

A DD or a demand draft is a negotiable instrument issued by the bank. Let us understand a negotiable instrument! It has the power to guarantee a specific amount of payment to the mentioned name of the payee. Therefore, it cannot go to any other person no matter the situation.

Usually, the bank issues the draft to a customer/ client guiding another bank or its branch to pay the defined amount to the payee.

A demand draft can be compared to a cheque, but it is hard to counterfeit and secure. It is secure because the drawer has to pay before issuing a demand draft to the bank, whereas a cheque can be issued without sufficient funds in your bank account. Therefore, a cheque can bounce, but drafts assure a safe and on-time payment.

You can pay via a draft on demand. It cannot be paid directly to the bearer, but the beneficiary must present the draft directly to the branch. The clearing mechanism of the bank can also collect the payment.

Demand drafts are mostly used when the parties are unknown to each other and lack trust because using a Demand Draft negatives all the chances of fraud or a scam.

What is a Demand Draft Scam?

People think that demand drafts are one of the most secure ways of transferring money. Demand draft is a common practice. The darknet plays a vital role, and sophisticated equipment is readily available, leading to such crimes.

What happens in a demand draft fraud? The scammer issues a fake DD in the name of the payee. The situation makes it very hard to track down the scammer who gave the draft from the bank, and the payee is charged with legal consequences. If caught using a fake DD, the bank has the right to launch a complaint to the police against the receiver, and they will have to face legal proceedings in court.

It can land someone in grave difficulties, and thus it is essential to follow the rules in place to avoid or even deal with any fraud.

Here are some steps you follow not to get fraud.

Keep Proper Information on the Drawer

Always get the valid contact information of the drawer and always run a background check to verify the information. The idea cannot be deemed a full-proof plan, but it will help you narrow down the search area and track the fraudster. Always keep the minutes of your conversation or deal with the drawer handy so that you can stay two steps ahead and not get in the circle of doubt.

Always Keep a Copy of the Draft

Always make some colored photocopy of the draft. Keep one safe and the other one handy. It will always help you identify any forgery in the draft. It is essential if the draft carries a significant amount on them.

Take Legal Action Immediately

Banks are very swift with taking legal actions against the receiver/ payee when they receive a fake draft. It happens because rules chain them, and all the actions are only taken to avoid a mishap. You can launch a counter FIR, and you might require some serious legal advice as you are now going to fight a three-front war. First, you will have to fight a legal battle in the court; second, you will have to track down the fraudster; and third, you have to recover your losses. In addition, we suggest you contact the drawer branch, as it is a good idea, the bank can help you provide vital information about the drawer, such as contact information, CCTV footage, etc.