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Too Easy For Bank Accounts To Spring a Leak

kdawson posted more than 6 years ago | from the drip-drip-drip dept.

Security 208

The NYTimes has a cautionary tale of automated clearing house fraud. Parties unknown siphoned money from an individual's bank account. Nothing too unusual there, except that it was an elite private banking account at JPMorgan Chase, and the account holder is out $250K — the bank will only cover $50K of his loss. The $300K came out of the account in small transactions over 15 months. The bank offered no recourse except to open a new account, a large hassle given that the account is more than 20 years old and its holder writes a thousand checks a month. The article details how the spread of electronic settlements between banks has given rise to growing automated clearing house fraud — if anyone gets hold of the magic combination of account number and bank routing number, and once has permission to withdraw funds, all bets are off. Banks are unlikely to question future withdrawal orders. Moral of the story: go over your bank statements line-by-line every month, and question anything that looks funny.

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Well... Why? (4, Insightful)

Creepy Crawler (680178) | more than 6 years ago | (#24822417)

Why are not banks responsible for fraud?

Is it not the bank's responsibility to maintain security and keep secure transactions?

Then... Why the limitation of 50k$ when FDIC covers 100$k ?

Re:Well... Why? (5, Informative)

larry bagina (561269) | more than 6 years ago | (#24822483)

The FDIC $100,000 coverage is in case the bank goes bankrupt (or hits financial trouble).

Re:Well... Why? (1)

lysergic.acid (845423) | more than 6 years ago | (#24823017)

general case -> specific case
the Federal Reserve insures the bank. -> the bank insures the individual.

i'd say that banking fraud is a pretty big potential contributor to financial trouble for any banking institution.

Re:Well... Why? (2, Insightful)

mangastudent (718064) | more than 6 years ago | (#24822523)

Why are not banks responsible for fraud?

Is it not the bank's responsibility to maintain security and keep secure transactions?

Then... Why the limitation of 50k$ when FDIC covers 100$k ?

I'm sure these were as far the the bank could tell proper and secure transactions. The issue here is that the account holder didn't notice for 15 months!

The FDIC protects you from bank failures, not something like this.

Bottom line: being wealthy does not absolve you of the duty to balance your checkbook. Do that every month and you'll catch that sort of thing in plenty of time to get a full refund.

Re:Well... Why? (5, Informative)

Creepy Crawler (680178) | more than 6 years ago | (#24822573)

Next time, try reading the article.

Or for critical reading, read the cut-n-paste

And a retail bank statement is kindergarten arithmetic compared with the monthly statement for a private banking client. Indeed, Mr. Wyser-Pratte said that the statements have become so complicated not even a Wall Street veteran like himself could detect the continuing theft.

"I kept complaining that the bank's records showed I was overdrawn when I shouldn't be," he said. Each time, he was assured that the statement was accurate, even if he could not decipher it.

That second paragraph cues me in that he DID complain, and was given a runaround and no real answers.

Re:Well... Why? (3, Interesting)

Free the Cowards (1280296) | more than 6 years ago | (#24822855)

He really just complained that he couldn't balance his checkbook, though. If the difference was so large, he should have tracked it down line by line until the discrepancy was resolved, or fraud discovered.

And I don't understand how a statement can be "complicated". For each transaction, there is a line. There is an amount, and a name of some kind that tells you what it was for. You compare this with your records. If you have a match, then you're good, move to the next one. If nothing in your records matches that line, then you have an error, red alert, call your bank and tell them you've found an important mistake or fraud.

Sounds to me like he found a discrepancy but never went through the work of tracking it down. And as a result this theft went undetected for far too long.

Re:Well... Why? (1)

houstonbofh (602064) | more than 6 years ago | (#24822965)

He really just complained that he couldn't balance his checkbook, though. If the difference was so large, he should have tracked it down line by line until the discrepancy was resolved, or fraud discovered.

And I don't understand how a statement can be "complicated". For each transaction, there is a line. There is an amount, and a name of some kind that tells you what it was for. You compare this with your records. If you have a match, then you're good, move to the next one. If nothing in your records matches that line, then you have an error, red alert, call your bank and tell them you've found an important mistake or fraud.

Sounds to me like he found a discrepancy but never went through the work of tracking it down. And as a result this theft went undetected for far too long.

If you read the article you know he writes a lot of checks. It said thousands. Lets assume 3000. Assuming 10 seconds to compare, which it wont be as the checks come out of order, that is 8.33 hours a month. And that does not count deposits... We aren't just talking about an hour at the kitchen table.

Re:Well... Why? (3, Insightful)

EvilIdler (21087) | more than 6 years ago | (#24823003)

If you have that much money, eight hours per month to keep it seems reasonable.

Re:Well... Why? (3, Insightful)

Belial6 (794905) | more than 6 years ago | (#24823011)

If he writes that many checks a month, the cost of hiring someone to go line by line through the statement would be trivial.

Re:Well... Why? (1)

Free the Cowards (1280296) | more than 6 years ago | (#24823051)

So what? He handles a lot of money, he needs to ensure that things are happening the way they should. He either needs to take the time to verify his statements or he needs to hire someone to do it for him. You don't get to throw up your hands and say "too much work!" just because you write an enormous number of checks.

Re:Well... Why? (1)

arminw (717974) | more than 6 years ago | (#24823175)

...We aren't just talking about an hour at the kitchen table...

It seems that anyone with that kind of money ought to be able to afford to hire someone to do the checking of the records. It would have been worth it in this case.

Re:Well... Why? (1, Interesting)

Anonymous Coward | more than 6 years ago | (#24823057)

RTFA...he did complain.

Second the fact that you can't understand how an account statement can be complicated shows that you've never seen a large private banking portfolio. This guy probably has 5-10 different accounts all for different purposes with different rules, fees, pay-ins, and pay-outs. Additionally some of these will be investment accounts, some cash accounts, come money market, etc.

On top of that he may get a combined statement with various accounts listed.

It's completely reasonable for him to not be able to figure it out. It's also stupid for the bank to take the position they did if he's that wealthy because when he moves all his funds and loans to his new private banker it will cost much more. The bank if they were smart would have insurance to manage the risk and would make sure the customer got his cash back.

Re:Well... Why? (4, Insightful)

lysergic.acid (845423) | more than 6 years ago | (#24823073)

that's easy to say when you're not writing a thousand checks a month.

and the fact of the matter is, he didn't issue or authorize the account transfers that he's being charged for. so why should he have to pay for fraud? is there a clause in his banking contract that says "the bank is allowed to give away your money without your consent as long as we list the transactions in your monthly statement?"

Re:Well... Why? (4, Interesting)

Free the Cowards (1280296) | more than 6 years ago | (#24823361)

Not quite. It's more that any transaction which is printed in your statement and which is not challenged by you within a certain period of time (typically two months) is considered to be authorized.

If your financials are so complex that you are unable to audit them for evidence of fraud then you need to hire professional help.

Re:Well... Why? (3, Interesting)

mangastudent (718064) | more than 6 years ago | (#24823147)

I do not believe he's telling the truth, and if he really is that stupid, and e.g. totally unable to hire a CPA for a few days of low impact forensic accounting, he deserves exactly what he got.

My parents are millionaires. They also did a lot of bookkeeping to get there (I can remember a number of nights when they were looking for the wrong transaction(s) that caused a balance mismatch). Nowadays they're retired and still check all their statements each month and reconcile those against their records.

I repeat: being rich does not absolve you of the duty to balance your checkbook.

Re:Well... Why? (0)

Anonymous Coward | more than 6 years ago | (#24823265)

And if he did complain, the inevitable court case will find in his favour.

Sounds like Credit Suisse (4, Informative)

Animats (122034) | more than 6 years ago | (#24823385)

And a retail bank statement is kindergarten arithmetic compared with the monthly statement for a private banking client.

I used to have a Credit Suisse account, and they did, indeed, have incomprehensible statements, even for a simple situation. They had a "current account" and a "time account". The current account didn't pay interest, but the "time account" did. Interest from the time account went into the current account, and when it exceeded US$1000, it was moved to the time account in multiples of $1000. Separate statements were provided for each account, on different schedules, didn't mention what was happening in the other account, and were difficult to match up. Lots of weird fees, too, including charging commissions on their own time deposits. It all seemed to be about fee maximization.

And this was without doing much in the way of transactions on the account. If you did lots of transactions against accounts like that, it would be really tough to track what was happening. The combination of inter-account transactions and differing statement cycles confuses the issue.

Re:Well... Why? (2, Informative)

xstonedogx (814876) | more than 6 years ago | (#24822661)

Yes, but they weren't proper and secure transactions. Why should the account holder be culpable for the bank's failure to protect itself from fraud?

To your second point, I agree. Someone who has so much money that they don't notice an average of $20,000 per month missing from what is apparently a very active account should probably hire an accountant. For that much money you can get a very good one and apparently still have enough money left over that you will come out ahead.

Not true... (2, Insightful)

raehl (609729) | more than 6 years ago | (#24822893)

To your second point, I agree. Someone who has so much money that they don't notice an average of $20,000 per month missing from what is apparently a very active account should probably hire an accountant. For that much money you can get a very good one and apparently still have enough money left over that you will come out ahead.

*IF* you happen to be stolen from. If you're not unlucky enough to be stolen from, then the accountant to watch your account is a waste of money.

Since the odds you become a victim are probably in the single-digit percentile (or less), paying for the accountant would be a bad investment. It would be cheaper to buy some sort of insurance.

It's a classic case of where paying for the losses is less expensive than preventing the losses, especially when the cost of the loss is spread around everyone at risk of loss.

Re:Not true... (1)

wellingj (1030460) | more than 6 years ago | (#24823211)

Accountants are also good at finding tax loop holes. That's how they generally justify what how much they cost. The security benefit is just icing on the cake.

Indeed. (4, Insightful)

xstonedogx (814876) | more than 6 years ago | (#24822611)

A bank account is a loan to the bank in exchange for money or services. If the bank is defrauded out of some money, why is it the account holder who loses out?

If someone claims to be my bank and tricks me into giving them $200, can I deduct that amount from my next car payment?

Really think about what has happened here. Person A loans Person B $100. Person C tells Person B that Person A owes them $100, so if Person B pays Person C $100 everyone will be square. Person B obliges not realizing Person C is lying. Is Person A the one out $100?! He had no control over the actions of Person C or Person B!

Re:Indeed. (3, Insightful)

mysidia (191772) | more than 6 years ago | (#24822803)

Yes, but in this case Person B tells Person A about the transfer to person C, in the form of a printed statement.

Person A acknowledges the correctness of the written statement by failing to report an error after Person A has examined it.

The banking laws give Person A a legal obligation to take due care in examining the statement within 30 days. If there was an unauthorized ACH transaction, it may be reported within 60 days time, which is ample opportunity for Person A to rectify the situation.

In this case the fraud was over 15 months, right? So there would have been a good number of statements with transactions on it that Person A did not authorize.

Re:Indeed. (2, Interesting)

hazem (472289) | more than 6 years ago | (#24823137)

A bank account is a loan to the bank in exchange for money or services. If the bank is defrauded out of some money, why is it the account holder who loses out?

Sadly, it's because the bank has much more resources than the individual. Sure, the individual could hire lawyers and mount an attack, but the bank is big enough, has enough political ties, and has so many more resources that they're probably able to just weather the attack until the individual is spent. Even worse, the bank probably has the laws on its side in these instances.

It's certainly not right in any moral way but it's simply the facts as they are.

That said, he should have swallowed some of his wall street pride and hired an accountant to manage his bank accounts and make sure this kind of thing wasn't happening. I have virtually no money but I check my account activity and balances on my checking account almost daily and with my other accounts at least once a week. But then again, I can't afford to have $2000 (let alone $20,000) disappear in a month.

Re:Well... Why? (2, Insightful)

ishobo (160209) | more than 6 years ago | (#24822735)

If you read the article... The customer had 60 days (as required by federal law) to report the suspected fraud. Basically, the man did not pay attention to his statements. He does say that he was not aware of the 60 day rule. Banks send out updated customer agreements all the time. The account was 20 years old. I suspect he was unaware of it because he never scrutinzed his agreement, the same way he never scrutinzed his statements.

Re:Well... Why? (1)

vicviper (140480) | more than 6 years ago | (#24822749)

Why are not banks responsible for fraud?

Is it not the bank's responsibility to maintain security and keep secure transactions?

Then... Why the limitation of 50k$ when FDIC covers 100$k ?

ACH is more like a network than a bank owned commerce industry. It's the method by which the the transactions take place, as opposed to over the teller line, via ATM, etc. The bank is required to maintain it's end of the security of the ACH chain: it's networks, the terminal end points, and to oversee that things balance. The problem with this kind of fraud is that it requires account holders to be vigilant.

Most banks will allow you to specify an account to not receive ACH debits. If you're not going to be reviewing the statements regularly, this is something you probably want to do.

Re:Well... Why? (2, Informative)

LostCluster (625375) | more than 6 years ago | (#24822755)

Then... Why the limitation of 50k$ when FDIC covers 100$k ?

FDIC is not fraud insurance, it's total bank failure insurance. Big difference.

Re:Well... Why? (1)

mysidia (191772) | more than 6 years ago | (#24822765)

FDIC insurance protects only in the event of bank insolvency.

FDIC insurance does not protect against theft or fraud, even theft or fraud by the bank.

In case of fraud, the onus is on the victim to report it to the authorities and pursue action against the person(s) who perpetrated the fraud.

If the perpetrator is never caught, the victim is SOL.

In case of unauthorized bank/cc transactions, check forgeries, ach fraud, etc, though, the victim is the bank, provided you the accountholder notice the transaction and file the proper reports and affidavit of unauthorized transaction within the allowed time.

There are laws that make the bank liable, but if you the accountholder fail to examine your statements properly, and report the situation within 30 days, the responsibility for the loss falls to you.

Re:Well... Why? (0)

Anonymous Coward | more than 6 years ago | (#24823279)

This is no way to run a bank.
Go get yourselves a bank account in a decent bank that does not allow this to happen.
Who needs a bank where someone can take money
off your account?
Vote with your feets before it is too late.

Moves (1, Insightful)

Joebert (946227) | more than 6 years ago | (#24822443)

If I can get ahold of enough information to withdraw funds in the first place, getting a copy of your transaction history and planning out transactions that blend in so well not even you will notice them isn't going to be any harder.

Re:Moves (2, Insightful)

russotto (537200) | more than 6 years ago | (#24822467)

The only information you need to withdraw funds from a checking account is printed on every check. Getting a copy of a transaction history and planning transactions that blend well certainly will be harder.

Re:Moves (1)

Joebert (946227) | more than 6 years ago | (#24822517)

Poppycock. I bet I can get the transaction history using the same or less information than is being used to syphon funds from an account.

Re:Moves (1)

vicviper (140480) | more than 6 years ago | (#24822837)

Poppycock. I bet I can get the transaction history using the same or less information than is being used to syphon funds from an account.

Really? There would be plenty of people in the industry that would be very interested to know how you would pull this off.

Re:Moves (1)

Joebert (946227) | more than 6 years ago | (#24822867)

What's it worth to them ?

Re:Moves (1)

vicviper (140480) | more than 6 years ago | (#24822907)

What's it worth to them ?

Quite a bit I'd imagine. There are privacy issues at stake, and as you can tell from the article, potential security issues.

Re:Moves (1)

ishobo (160209) | more than 6 years ago | (#24822853)

Checks have the routing and account number on the bottom, and that is all you need to transfer funds. My checks only have my name, no address or phone number. To get the transaction history you would need the SSN, address, and phone number. My bank will not send statements to a different address, nor will they give transaction information over the phone. You have to go into the branch and request a copy. Make sure you have identification. My bank also has a fingerprint scanner. And my address and phone on file are not the same as my residence. Good luck.

Magic numbers on every check.... (4, Insightful)

mangastudent (718064) | more than 6 years ago | (#24822459)

if anyone gets hold of the magic combination of account number and bank routing number

Ummm, you do realize that's on the bottom of every check that you write (in MICR [wikipedia.org] ). That's how your check gets matched up to your account for processing....

Re:Magic numbers on every check.... (2, Insightful)

Phroggy (441) | more than 6 years ago | (#24822609)

Yes; if you never write me a check, or provide me with your account information in some other way, then I can't steal all your money.

The only form of authentication on a check is your signature. Electronic funds transfers don't have that.

Re:Magic numbers on every check.... (0)

Anonymous Coward | more than 6 years ago | (#24822683)

Even then the clowns don't check the validity of signatures on a cheque! Just ask my mate whose company went down the tubes after fraudulently written cheques with only one of two signatures required were honoured!

Re:Magic numbers on every check.... (1)

caller9 (764851) | more than 6 years ago | (#24822647)

Also from the post "...and its holder writes a thousand checks a month."

Wonder how this happened.

You left the important part out.... (0)

Frosty Piss (770223) | more than 6 years ago | (#24822719)

Ummm, you do realize that's on the bottom of every check that you write (in MICR). That's how your check gets matched up to your account for processing...

You left the important part out (the part that should have put most of the responsibility on the bank)...

...and once has permission to withdraw funds...

Re:You left the important part out.... (2, Insightful)

Todd Knarr (15451) | more than 6 years ago | (#24822793)

No, he didn't. What's to stop someone from claiming to have authorization? Think a minute. When was the last time, when paying by automatic debit from your account (e-check), you told your bank that the merchant had authorization? You didn't. You told the merchant he had authorization, but the bank is simply trusting that he does. So what exactly stops a fraudster from claiming he's got authorization too?

Re:You left the important part out.... (0)

Anonymous Coward | more than 6 years ago | (#24822843)

Yes, yes he did, moron. The merchant has a merchant account, thus permissions to do transactions. Joe Blow doesn't. Who gave the mechant permissions? The bank.

Re:You left the important part out.... (1)

analogueblue (853280) | more than 6 years ago | (#24822939)

Getting a merchant account takes about 10 minutes. I have several. One of them ended up with a mis-spelling of my name and a wrong address due to bad handwriting. It would be very hard to trace to me at this point. Having a merchant account shouldn't give you any authority to pull money from other people, more than a normal account.

Re:You left the important part out.... (1)

arminw (717974) | more than 6 years ago | (#24823311)

...When was the last time, when paying by automatic debit from your account (e-check)...

Never, because doing that is a singularly stupid idea. If, (and that's a big if) if becomes absolutely necessary or terribly convenient to have some automatic payment to someone, do it from a credit card account with a fairly low limit. Also, many credit cards offer airline miles or other rewards, whereas many banks don't even pay even a pittance of interest on checking and ATM accounts.

Re:Magic numbers on every check.... (2, Interesting)

rprins (1083641) | more than 6 years ago | (#24822785)

Wait, why don't they know the identity of the withdrawer?

scary (1)

polar red (215081) | more than 6 years ago | (#24822463)

Does this mean that your account number is enough to make a withdrawal from it ? No secret code necessary ?????? no card required ?

Re:scary (2, Informative)

Creepy Crawler (680178) | more than 6 years ago | (#24822501)

Thats correct.

I trawl through your trash looking for checks (photocopies or voids, it doesnt matter).

All I need is your routing number and checking acct number. Even the routing number can be obtained by calling the bank and asking for it. It's nearly public knowledge.

The only tricky thing is the requirement of ACH access. One could "pay via e-check" by getting the 2 chunks of information and forge them. There's not a damned thing that can be done about that. Once it hits an approved ACH dealer, you're screwed out of your funds.

I have ACH blocks on my account.

Re:scary (1)

polar red (215081) | more than 6 years ago | (#24822539)

Damn, I'll stay in Europe with my money ...

Re:scary (2, Insightful)

Pinky's Brain (1158667) | more than 6 years ago | (#24822763)

Banks allowing automated withdrawals are standard here too in the Netherlands (although you can block automated invoicing for your account all together). The companies keep your admission slips and only have to reproduce your admission when you challenge a payment (in time).

There should obviously be an automated system where you yourself can allow automated invoicing for specific accounts and for specific maximum amounts ... but there isn't. All the banks have are some heuristic automated checks to make sure everything is above board, if you manage to evade both those checks and no one challenges your invoices for the time you need to siphon away the money and collect it you are homefree.

Re:scary (1)

Pinky's Brain (1158667) | more than 6 years ago | (#24822799)

Hmm, though come to think of it ... it wouldn't be that hard to set this up yourself with electronic banking ...

Re:scary (1)

Pinky's Brain (1158667) | more than 6 years ago | (#24822817)

Or at least you could setup a warning system assuming you can get electronic transaction sheets via e-mail.

Cover (1)

Renraku (518261) | more than 6 years ago | (#24822469)

What's to keep the bank themselves from taking $100k out sometimes and then saying they only cover $50k of it? They have access to all of that information and I wouldn't put it above one of them to do so.

If I were the company that lost $200k+ mentioned in the article, I would make the bank spend at LEAST $200k+ in legal fees to defend against my many lawsuits I'd file. Run them into the fucking ground if they won't insure your money and investigate problems on their own dollar.

Re:Cover (2, Informative)

mark_wilkins (687537) | more than 6 years ago | (#24822535)

The bank's responsible for 100% if you catch it within 60 days of the transaction. This guy did not piece together what had happened until 15 months after the first transaction.

Re:Cover (0)

Anonymous Coward | more than 6 years ago | (#24822827)

Yes, but that's what I have a problem with. The "slow" leak approach is very common just BECAUSE it goes under the radar. We are talking about *unauthorised* transactions here, and it is not my job to check if the bank is exercising the required and legally dictated care over my funds. It is proper for me to have a "reasonable expectation" (a legal phrase) that the bank does what it is required to do.

However, given just how much care I get from banks I think switching to gold bars and stuffed mattresses may be a safer way. Unless you live in Zimbabwe that appears to hold value better than when a bank has its hands on it, and there is one bank that will get a formal criminal complaint filed within a month. The police will have fun with this one because it goes all the way up to the chairman, so I'll enjoy myself watching that explode in the press. It's rather nice to have written evidence of them supporting blatant fraud, even more so because they had every chance to avoid it.

Ah, the next few month may be end-to-end entertainment, mostly because I only have to light the fuse..

Matches, where are my matches..

Re:Cover (1)

ishobo (160209) | more than 6 years ago | (#24822991)

The "slow" leak approach is very common just BECAUSE it goes under the radar

Not if reconciled the statements.

Re:Cover (0)

Anonymous Coward | more than 6 years ago | (#24822561)

What's to keep the bank themselves from taking $100k out sometimes and then saying they only cover $50k of it? They have access to all of that information and I wouldn't put it above one of them to do so.

Probably the same thing that stops you from raping natalie portman.

Re:Cover (0)

Renraku (518261) | more than 6 years ago | (#24822593)

Incidence of Natalie Portman rape would rise sharply if she had no proof she was ever raped, because the rapists were responsible for providing the evidence to convict them.

Re:Cover (0)

Anonymous Coward | more than 6 years ago | (#24823095)

Incidence of Natalie Portman rape would rise sharply if she had no proof she was ever raped, because therapists were responsible for providing the evidence to convict them.

Re:Cover (0, Troll)

trezima (1168921) | more than 6 years ago | (#24822729)

The only thing stopping me from raping Natalie Portman is an ocean.

Re:Cover (1)

Xuranova (160813) | more than 6 years ago | (#24822659)

Run JP Morgan into the ground with legal fees? Yea good luck with that.

Re:Cover (0)

Anonymous Coward | more than 6 years ago | (#24823195)

Forget the lawyers. Just have "Vinnie" collect it from the JP rep for a 10% finders fee. Or Else. :^)

Re:Cover (1)

vicviper (140480) | more than 6 years ago | (#24822707)

What's to keep the bank themselves from taking $100k out sometimes and then saying they only cover $50k of it?

3rd party auditing. Many regulated institutions are required to have this.

My bank sends daily alerts for large transactions (1)

davidwr (791652) | more than 6 years ago | (#24822471)

My bank sends you alerts any time there is a transaction larger than a limit you set.

Set your limit to $1 and you see almost everything. It's like getting a bank statement every day.

Of course, you can also do real-time checking any time you want.

Re:My bank sends daily alerts for large transactio (2, Interesting)

eln (21727) | more than 6 years ago | (#24822559)

I use Quicken to take care of my finances. Every day, I enter in every check or debit transaction I made that day. Then, I download transactions from my bank online, usually every morning. If there's a transaction that doesn't match up to something I've already entered, I can see it immediately. This allows me to not only easily spot fraudulent transactions, but also allows me to keep an eye on how much money I really have available, regardless of what the bank says.

Now granted, I only have a couple of accounts and I'm not writing thousands of checks a month, but it seems like this method is easily doable for most people. It's a lot easier to spot fraud if you have a good handle on what's supposed to be there and what isn't.

Also, I'm not really shilling for Quicken or anything...there are plenty of other products that will allow you to manage your money in basically the same way, including the online update component (which is the big key for me).

Re:My bank sends daily alerts for large transactio (1)

Sponge Bath (413667) | more than 6 years ago | (#24823171)

I enter in every check or debit transaction I made that day.

I feel compelled to chime in with a 'me too'.

It seems very basic. Keep track of every transaction in detail. There is no other way to know.

Do you hand a cashier a $20 and shove the change in your pocket without counting it? If so then you have no room to complain if you come up short later.

Complaining that is takes too long or is too hard is not an answer. It is your money and it is your responsibility. This goes for incoming bills also, don't accept the amount blindly: compare every line item to what is contracted. If you don't already do this then you will likely be suprised at how often a mistake is made (always in favor of the biller).

Re:My bank sends daily alerts for large transactio (2, Informative)

crashfrog (126007) | more than 6 years ago | (#24823419)

This allows me to not only easily spot fraudulent transactions, but also allows me to keep an eye on how much money I really have available, regardless of what the bank says.

Great. So, like this guy did, you go to your bank with your QuickBooks or whatever, showing that you should have substantially more money than you do, and the bank tells you to go soak your head, they're the bank goddammit, and there's no way in hell that your accounting could be more accurate than theirs.

You know, like they told this guy. Then what the hell do you do? Apparently you can go fuck yourself, since according to the laws the banks purchased, they can hand out your money to anyone that presents trivially falsifiable certifications, and there's not a damn thing you can expect them to do about it.

This guy went every month to the bank with evidence of funny business, and they told him that he must be running the numbers wrong, and then handed him balance statements that obfuscated the transactions.

Sure, it's prudent to keep track of your own money. But what about when you've kept such good track of it that you realize some is missing? What the hell are you supposed to do then? I don't think Quicken has a form for that.

Re:My bank sends daily alerts for large transactio (0)

Anonymous Coward | more than 6 years ago | (#24822571)

I dont have mod rights, so i can't plus 1 you informative.

i wish my bank had that service!

i'm with a UK bank, what company does this?

Re:My bank sends daily alerts for large transactio (1)

Zwicky (702757) | more than 6 years ago | (#24823127)

i'm with a UK bank, what company does this?

I think Lloyds TSB and some others who allow internet banking will send you weekly text messages (though they may randomly change your password just for a laugh ;) ).

I don't know of any that provides anything more than this.

Re:My bank sends daily alerts for large transactio (1)

Teun (17872) | more than 6 years ago | (#24823209)

All banks worth your effort have electronic banking available.

Oh wait, you said UK, they have traditions. :)

Just call them what is needed for download of the transactions, if not possible change to a more contemporary bank.

First Millenium Bank (1)

davidwr (791652) | more than 6 years ago | (#24823253)

First Millennium Bank, banking the same way for over 1000 years!

It's easier than that. (1)

bigtallmofo (695287) | more than 6 years ago | (#24822477)

go over your bank statements line-by-line every month, and question anything that looks funny

Or you could just compare expected balances. You know, I started with X, authorized Y debits and now should have Z. If balance ~ equals Z, no need to go line by line.

Sure, it royally sucks if someone made off with your money. But the account holder has some responsibility, wouldn't you agree? If someone is siphoning money out of my account for 15 months, I'd definitely notice and report it in the first month.

Of course, other people might not watch their finances as closely but what's reasonable? I think after 15 months of not noticing an amount that slowly grew to $300k missing, then your bank is not the only one at fault.

Re:It's easier than that. (1)

jfim (1167051) | more than 6 years ago | (#24822565)

If someone is siphoning money out of my account for 15 months, I'd definitely notice and report it in the first month.

He actually did. From TFA:

"I kept complaining that the bank's records showed I was overdrawn when I shouldn't be"

Re:It's easier than that. (3, Insightful)

Free the Cowards (1280296) | more than 6 years ago | (#24822889)

There's a big difference between "your records don't agree with mine" and "this transaction, right there, was not authorized by me and does not appear in any of my records". This fellow did the former but apparently never got as far as the latter.

Re:It's easier than that. (1)

zonky (1153039) | more than 6 years ago | (#24822583)

The laws/contract surrounding this are at fault. Either these are legal, authorised deductions, or they are not. It seems entirely perverse that Banks will accept and action unauthorised charges to your account. I would suspect that in many countries other than the US, the complainant would have been covered for the total losses. Blame the system that allows this, as the contract/laws which protect the bank, not the punter account holder.

Re:It's easier than that. (1)

vicviper (140480) | more than 6 years ago | (#24822807)

The laws/contract surrounding this are at fault. Either these are legal, authorised deductions, or they are not.

It seems entirely perverse that Banks will accept and action unauthorised charges to your account. I would suspect that in many countries other than the US, the complainant would have been covered for the total losses.

Blame the system that allows this, as the contract/laws which protect the bank, not the punter account holder.

The transactions aren't considered authorized, since you don't have to set up anything with the company and the bank. They're considered "pre-authorized".

There are laws/policies = that protect the consumer and the bank. Within 60 days you should be able claim it was not an authorized transaction, the bank credits your account, and gets a credit from the Federal Reserve.

Re:It's easier than that. (1)

Chaos Incarnate (772793) | more than 6 years ago | (#24822639)

He did compare the balances, and complained to the bank that they were off, but never bothered to actually do the line-by-line part.

Re:It's easier than that. (1)

hattig (47930) | more than 6 years ago | (#24823423)

I wonder if the bank even ever said "please can you check your statement in detail" before (as the summary says) just assuring him that it was all fine?

Re:It's easier than that. (0)

Anonymous Coward | more than 6 years ago | (#24822859)

I'm not being cruel, but serves him right for not installing Linux and GnuCash. A simple double-entry bookkeeping ledger (for which there exists an excellent built-in wizard) would have swiftly shown the discrepancies.
He probably used Microsoft Vista and Microsoft Money - well, let that be a lesson to ya.

Bank accounts springing leaks? (1)

Yvan256 (722131) | more than 6 years ago | (#24822679)

That's their own fault, putting up access via the intertubes and all.

Hmmmm (0)

Anonymous Coward | more than 6 years ago | (#24822731)

300k over 15 months. $26 per hour or $645 per day or $20k per month

1) Why didn't this guy's accountant spot $20k go walk-abouts after month 1?
2) Can I get that job?
3) ????
4) Profit!

20th century payments (1)

Faffe (915522) | more than 6 years ago | (#24822759)

Perhaps this is the reason I haven't seen a check around here this side the turn of the millennium. And people complain about credit card security...

Checks suck (4, Insightful)

ed.markovich (1118143) | more than 6 years ago | (#24822777)

We just had a story on automatic bill pay where I voiced [slashdot.org] my support for credit cards over writing checks. This story supports that:

First, if someone defrauds your credit card, you're not liable. Dispute the charge and you're done, the onus is then on the merchant to prove the validity of the transaction. With cash accounts, once the money is gone, it's gone.

Second, checking accounts are difficult to reconcile as can be seen from the linked story. The person in question despite being financially sophisticated, was not able to be SURE about what his balance should be. Because the checks settle out of your account at the timing discretion of the recipient of the funds, it's not possible to say what your balance on any given day should be, which makes it hard to spot problems as they occur.

While the Guy (hah) in the article probably cannot avoid writing many checks due to his business, the fewer checks an individual writes the easier it is to keep track of one's balances. As long as you have the discipline to not abuse your credit card, it's the way to go.

-Ed

Re:Checks suck (1)

shivamib (1034310) | more than 6 years ago | (#24822929)

In Brazil it's actually pretty difficult for establishments to accept checks. Worse even if it's a company check.

Seriously, how often would you write off a check as a company? A thousand checks a month??

Smells kinda fishy...

Re:Checks suck (1)

ishobo (160209) | more than 6 years ago | (#24823113)

ACH will not allow checks that are older than 45 days. Banks generally follow this rule whether the check has printed void dates or not.

it's not possible to say what your balance on any given day should be, which makes it hard to spot problems as they occur.

It is possible at the close of the account month. You reconcile with the statement. You can easily see if a transaction was never recorded or it is for a different amount. The 60 day rule is in play until you report the suspected fraud.

Re:Checks suck (1)

Teun (17872) | more than 6 years ago | (#24823255)

I agree a check is the worst of all options.

But this account had a deal where he could recall money within 60 days, something he didn't do.

I'm pretty sure a CC company would be resistant to returning money over a year after the occurrence.

you have 30 days to complain about fraud (1)

peter303 (12292) | more than 6 years ago | (#24822819)

My accounts have been compromised three times. I check the ones that are exposed tot he outside world more than once a monht - the rest every month.

Re:you have 30 days to complain about fraud (1)

vicviper (140480) | more than 6 years ago | (#24822945)

My accounts have been compromised three times.
I check the ones that are exposed tot he outside
world more than once a monht - the rest every month.

60 days from the date of the transaction.

$300K over 15 months?? (0)

Anonymous Coward | more than 6 years ago | (#24822865)

There are transaction ordering games that can be played by banks, but that doesn't change the basic cash flow over time.

Something seems fishy here. For god sake, that's $20K *per* *month*. That's far more than most people's entire incomes. You get two full months to report fraud. If you don't notice an extra $40K gone by then, well... sucks to be you.

Does the bank even have any way to tell a fraudulent transaction from a legal one, if both have the right account info? I don't know why it should be the bank's problem. It isn't like they were the ones who let his account info fall into the wrong hands. If the bank gave the account info away without his permission, then yeah, they should be 100% at fault and pay back the entire amount. But it doesn't sound like that is what happened. He wrote 1000 checks a month (WTF?? who even uses checks any more, let alone 1000 a month?) and proceeded to not notice $20K/mo disappearing from his account (yet more WTF??). I think the bank paying him back $50K is more than they should be obligated to do, unless they were the ones who leaked his data to begin with, which seems highly doubtful here.

Re:$300K over 15 months?? (0)

Anonymous Coward | more than 6 years ago | (#24823025)

Hmm - 1000 checks per month. Let's say 30 days per month. That's 33 checks per day, including weekends and holidays, or 4 per hour assuming he's at this 8 hours a day, or about one every 15 minutes. From his personal account, not even a business.

How the hell do you *do* that? I've probably written two checks in the past 4 or 5 years, both large checks under fairly atypical circumstances such as the down payment on a car.

Re:$300K over 15 months?? (1)

ishobo (160209) | more than 6 years ago | (#24823157)

Rich people live differently.

Re:$300K over 15 months?? (0)

Anonymous Coward | more than 6 years ago | (#24823375)

Rich people spend their money on making more money. The fluctuation in stock exchanges probably changes his net worth possibly several percentage points per day which is likely higher than this amount... it'd be fairly hard to co

The point is:Don't do business with JPMorgan Chase (1)

ancient_kings (1000970) | more than 6 years ago | (#24822949)

or you could lose everything you worked so hard for.

odd (1)

DaveGod (703167) | more than 6 years ago | (#24822961)

I'm very surprised that anyone with that kind of money doesn't operate two accounts, one that someone (certainly not the PA or secretary, the usual suspects) reconciles and one is slow enough to check themselves.

Banks have a significant role to play but it's not reasonable to assume your bank knows what and from whom you're not buying.

It could be worse than theft. Someone could transfer money into (or out of) a known account of organised crime.

Cheques? Those still exist? (-1, Redundant)

k33l0r (808028) | more than 6 years ago | (#24823001)

I still can't believe that people in so-called "first world" countries still rely on cheques for financial transactions. Over here in Finland NOBODY ever uses cheques. Not business, not individuals.

Everybody uses electronic transfers, account to account. Transfers can be made online (usually authentication is done with a grid of disposable codes, once the grid is used up you automatically get a new one from the bank), in the bank (requires you to identify yourself with official ID, e.g. driver's license etc.) or by using a terminal in a bank or shopping mall (authentication by using a regular credit/debit card).

I pay my bills online, as does everybody else (including my 70+ year old grandfather).

Upside of using electronic transfers is that they are very traceable, you can always find out to whom an unauthorised transfer was made (as unlikely as that is. Even key logging software is useless as each access code can only be used once).

Re:Cheques? Those still exist? (1)

ishobo (160209) | more than 6 years ago | (#24823243)

Everybody uses electronic transfers

That is what ACH does. Paper is no longer transfered between banks. If you pay bills online in the U.S. and the recipient has an ACH enabled account, it is all done electronicly. If not, an actual paper check is printed and sent. When a person takes a paper check to the bank, it is scanned and an ACH transaction is created. The paper check is then destroyed.

Upside of using electronic transfers is that they are very traceable,

What has happened in the credit card industry is happening in the check world. Either you have merchants scamming or you have people using your account information. Unlike the credit card, the money is taken immediately.

moD down (-1, Flamebait)

Anonymous Coward | more than 6 years ago | (#24823047)

Time for socratic principles applied to banking? (1)

blahplusplus (757119) | more than 6 years ago | (#24823185)

Socrates once said, "I know you won't believe me, but the highest form of Human Excellence is to question oneself and others."

Home Data-Mining (1)

adamofgreyskull (640712) | more than 6 years ago | (#24823241)

Banks, as a semi-preemptive attempt to protect your funds will use information gathered about your previous transactions and if some transaction is extremely anomalous, they will put a block on the card. This happened to my brother when he went to Hong Kong. HSBC stopped his card because it was unusual for cash withdrawals to be made from his card in Hong Kong. I've heard stories of other false positives but I've also spoken to people who've had their bank call them to check whether a transaction is legitimate which has turned out to be fraudulent...

My bank allows downloading of CSV files containing transaction data for my accounts, so stuffing it in a database is trivial. Does anyone know of a project that does something like this, learning what's normal over a period of time, then flagging transactions that may be suspect?

Re:Home Data-Mining (1)

the eric conspiracy (20178) | more than 6 years ago | (#24823367)

I had a similar experience on a trip to Korea - I could not use any of my credit cards to purchase merchandise in department stores there.

Good grief (0)

Anonymous Coward | more than 6 years ago | (#24823337)

Lawsuit time. That bank needs to get sued.

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