Is there anything banks can do?

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Master Baiter Joined: 04 May 2007 Posts: 139

It seems banks, and scam victims, are caught between the proverbial rock and a hard place.Banks of course have to abide by federal law that states that customers have to be given access to deposited funds in a timely manner, hence the "float" period was introduced between when the bank fronts the money and the funds from the check actually are moved from the drawer to the depositor. Of course this is ripe to be taken advantage of, so to cover their asses banks put the liability on customers. If the check comes back bad, it's the responsibility of the person cashing it; the bank gets their float back and the depositor must get the money they're owed themselves. The bank cannot or will not pursue the third party, which is exactly what scammers are counting on.

So, how do we close this loophole? Is there anything banks can do but aren't that would slow the losses from fraud and ID theft?

Zero Liability has become a common selling point of credit/debit cards. If you suspect fraud, they shut down the card and anything done up until then that you didn't do is wiped off the account. Most banks extend the same protection to checks, but this is all on the drawer's side; the customer who ran the card and the shmuck who cashed that check are SOL. The only protection the payee has is "caveat emptor", which is little comfort to a small business owner who just got a chargeback for $1100 worth of goods, or the individual who now owes their bank thousands and for all practical purposes no longer has a bank account.

I guess education is the most powerful anti-fraud tool.

Rule 1: If it sounds too good to be true, it probably is.
Rule 2: if someone you do not know personally asks you to send money by wire transfer ANYWHERE, don't do it.
Rule 3: Any payment sent by an unknown party should be carefully scrutinized and not drawn against until it truly has cleared the bank, not just after it has been made available.

Three simple rules, that, if followed, remove most of the opportunity a scammer has to con you. We won't get into how much fraud could be avoided by shutting down WU and MoneyGram; wire transfer is not itself fraudulent, but it is quite possibly the single biggest aid to scammers and the entire theory of the wire transfer system needs to be completely rethought.

Baiting Guru Joined: 31 Jan 2007 Posts: 12237

SumYunGai wrote:

Rule 1: If it sounds too good to be true, it probably is.

Rule #2, see Rule #1.

Remember, those that fall for any internet scam are not the brightest bulbs on the tree.

Ignorance + Greed = The reason why we are here.

Elite Baiter Joined: 02 Jul 2006 Posts: 1702

@pastor i disagree, with respect of course, but some victims are in a right financial nightmare, along comes a lad and so they fall victim making the nightmare even worse.

Others are vulnerable to exploitation, Were used to the junk a lad sends us, but a lot of it is very real looking, even experienced baiters sometimes post "is this a scam" because sometimes the lads are too damn believable, I think its also some lads will extort money.

Baiting Guru Joined: 31 Jan 2007 Posts: 12237

I respect your position and understand that all too well. I deal with it every day in RL. But my old man taught me this from a very young age...

Quote:

Rule 1: If it sounds too good to be true, it probably is.

The information about online scams is not very obscure. My only sympathy (though somewhat reserved) lies with the victims of Phishing scams.

If someone receives an unsolicited Email telling them that they have won the Ugandan Lottery, knowing full well that they have never visited a gas station in Uganda to purchase a ticket, and respond to it with their credit card information.... Well, I don't cry too much for them at night.

I am not much of a "blame the victim" kind of guy, and I will do my best to mess with these scammers operations the best I can. But I really think that people need to take personal responsibility for their greed and ignorance.

I am here as a safety net for those that didn't have a Mom or Dad to teach them Rule #1, by wasting the scammers time with the hope that they will not have that time to scam yet another victim. But I wont justify or excuse their ignorance.

[jmho] and not intended to start a huge debate.

Baiting Guru Joined: 04 Jan 2006 Posts: 3193

You are forgetting the people who win a lottery that they did, in fact, enter, or the Microsoft/AOL lottery, which can sound very reasonable to someone that knows little about email - which is 99% of people. The Microsoft lottery sounds commercially viable - everyone pays for Windows, so just $1 per copy would make a sizable jackpot.

You also forget the job scams - both cheque cashers and goods shippers.

And the charity scams have no element of greed and not much in the way of stupidity - maybe a bit too much trust.

On the original subject, banks should be more open about what it means to clear a cheque, and they should offer a service that only reflects the funds in the account once they are cleared by the issuing bank. It seems incredible to me that there is currently no way for the customer to determine when the issuing bank has agreed to pay. That would give people a way to ensure that the cheque was not a forgery, and would raise the bar for the scammers - they would have to steal and/or wash cheques. Even if the banks offered this as a little-advertised, optional service, they could demand its use once a customer had passed a few fakes. That would protect both them and their customer.

Posted: Tue Nov 13, 2007 1:14 pm

I believe that Scandinavian Banks have extremely advanced clearing arrangements which give a scammer less chance to operate the cheque mule type scam. However, this ignores the fact that there are plenty of other ways to scam a victim, whether it be by phishing or Lottery scams.

I have no great sympathy for banks but the practical problems in changing highly complex systems is very expensive and by nature unavoidably lengthy to implement, so that by the time it is in place the scammers have designed a work around or moved on to a different type of scam.

As an example, the recent 'chip and pin' system for credit and debit cards in the UK almost immediately had systems being developed by scammers to get round it. Of course there is greater momentum for added security to the card frauds as banks bear the losses. Of course, that is not the case with cheque scams. Do you want to pay extra charges because some dullwit is trying to join some daffy get rich quick cheque mule scam ?

Edjakashun - edjakashun - edjakashun is always going to be the best weapon - and us, of course. Very Happy

Posted: Tue Nov 13, 2007 1:29 pm

On the OP subject of banks and cheques, I have to say that I don't understand why there's this whole business about cheques taking several days to clear in any case. Banks are all linked by wire in any case so if a cheque gets presented to bank A then surely it should only take a matter of moments for them to check electonically that the cash is on the account of bank B and to then transfer it over. I bank with one of the big UK clearing banks and that is what happens if I present a cheque made out to me from someone else who has an account with the same bank. There are no specific security checks made. The signature on the cheque that is being paid in isn't (AFIK) scrutinised. So why is the system different if the cheque comes from another (recognised, legitimate) bank?

And BTW as far as CHIP and PIN is concerned, I was told - by a banker - the other day that the responsibility for any fraud now lies with the customer rather than the bank as the assumption is that the customer has been careless with the PIN number (as well as with the card). So the incentive for fighting fraud is no longer so great for the banks.

Posted: Tue Nov 13, 2007 7:17 pm

In this day and age, with instant communication, why on earth does it take so long for the receiving bank to determine whether the funds are available from the sending bank or not? That seems to me to be the big loophole that creates the problem.

Posted: Mon Nov 19, 2007 5:08 pm

Speaking from the "inside" of the banking world, the US has tried to protect the banks somewhat more by enacting Check 21 which results in wuicker clearing times for checks. Scanned images are now accepted in lieu of an actual paper item. The problem now lies with the institutions to get up to date with the latest technology to comply. Clearing times should lessen to hours if not at least the same day for paper items.

The real problem in the electronic age is the continuing use of paper items. These are the greatest sources of liability for any individual or institution. People can pay things online or use plastic cards with far less potential for loss.

Of course I can't speak for banking in the UK but I would assume many of the same things apply.

Posted: Mon Nov 19, 2007 6:03 pm

I would think less of this happening in the US with Check 21 now. Many grocery stores have a piece of hardware at the register that reads your check and transfers the money out of your account into theirs IMMEDIATELY, just as though it were a debit card. They even hand the physical check back to you for your records!

If my local grocery store can do this, for heavens sake, why not my local bank? If there is an additional fee ask me if I want that service and if so I have to pay $1.00 for it or whatever.

But, see also Rule #1.

And Gomer here in the US is it spelled edumakatshun. I know you Brits don't like to spell in proper English and all Wink

Posted: Mon Nov 19, 2007 6:21 pm

Be careful who you hand a cheque to.

If you are concerned about identity theft, what more can you tell someone other than by handing them a cheque with your bank's name and address, sorting code/routing number, account number, your name and a specimen of your signature - and on American cheques, often your home address too.

When fraud is perpetrated in the banking system, there is only ever going to be one loser and it's not the banks involved. If the signature is counterfeit or a forgery then legally it cannot be charged to the person purporting to have issued it, so the person paying it in will be fortunate to get away with just a slap on the hand.

Don't pay cheques from strangers into your bank account - but why would you want to anyway ?

Posted: Mon Nov 19, 2007 6:47 pm

Gomer:

Amen! I don't use Checks unless I have to. If I am out and about and do not have cash money it is debit/credit card where I have protection. If I am really worried about the merchant I have one card that I use for almost nothing. I'll put it on that card so if it has to be closed no big deal. Scrutinize your statement each month and object to the card issuer if something does not look right. There have been times where I could not find my receipt for something on my card, call the CC company, and they will get it from the merchant and send it to you. If it is your signature or it refreshes your memory call the CC and tell them it is your charge. If it is a forgery then you are armed to fight.

Just have to pay attention that is all Smile

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