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Security The Almighty Buck

Too Easy For Bank Accounts To Spring a Leak 208

Posted by kdawson
from the drip-drip-drip dept.
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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Too Easy For Bank Accounts To Spring a Leak

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  • Well... Why? (Score:5, Insightful)

    by Creepy Crawler (680178) on Sunday August 31, 2008 @04:31PM (#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? (Score:5, Informative)

      by larry bagina (561269) on Sunday August 31, 2008 @04:39PM (#24822483) Journal
      The FDIC $100,000 coverage is in case the bank goes bankrupt (or hits financial trouble).
      • 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: (Score:2, Insightful)

      by mangastudent (718064)

      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

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

        by Creepy Crawler (680178) on Sunday August 31, 2008 @04:47PM (#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? (Score:4, Interesting)

          by Free the Cowards (1280296) on Sunday August 31, 2008 @05:15PM (#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.

          • 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? (Score:5, Insightful)

            by lysergic.acid (845423) on Sunday August 31, 2008 @05:41PM (#24823073) Homepage

            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? (Score:5, Interesting)

              by Free the Cowards (1280296) on Sunday August 31, 2008 @06:15PM (#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.

              • while i see the logic behind such policies for regular accounts, i don't think it's justification for absolving the bank of all liability in case where criminals target the inherent vulnerabilities of banking protocols.

                when the bank mismanages funds or are subjected to fraud, it's not the bank who actually loses money. it's the customers whose money is being entrusted to the bank. so what incentive does the bank have to fix security flaws and protect their clients' assets if they're not held responsible for

                • Re:Well... Why? (Score:4, Informative)

                  by Free the Cowards (1280296) on Sunday August 31, 2008 @11:23PM (#24825989)

                  Banks are responsible for fraudulent transactions if you tell them about it in a timely fashion. Banks don't and can't know whether every single transaction is legitimate or not. There's simply no way for them to do so. For example, what if somebody alters one of your checks, for example, to read an amount greater than what you wrote? Assuming a good alteration, there's no way they could know that this is not the amount of money that you intended.

                  Even in the case of more obvious fraud, it should be clear that there needs to be some kind of time horizon. What if I'm the victim of ACH fraud as this person was, but I don't tell the bank about it until five years after the fact? It's way too late for the bank to do anything about it by then. And in fact this would leave the bank open to different types of fraud. For example, you arrange for a friend to "defraud" your account by some amount, split the money between you, then have your friend seal himself off from the offending account over the intervening years. Then five years later you make a complaint and get your money "back", resulting in a healthy profit for the both of you with little risk.

                  If we're on the same page about it so far, the question is what that time horizon should be. Well, big daddy government has already answered that for us: that time horizon is 60 days. That's why this guy is still getting $50,000 back from his bank, because that's the amount that was stolen within the past 60 days.

                  If this guy had noticed the fraudulent transactions in a timely manner then I would agree that we shouldn't blame him at all for failings of the system. But he managed to miss twenty thousand dollars a month leaving his account for well over a year before he figured out that he was being ripped off. He discovered trouble earlier but apparently decided that it was too inconvenient to follow up on. When asked about the discrepancy, the bank told him that their statements were accurate. What was absolutely true! Their statements included an enormous amount of theft that his records did not. But for some reason he didn't pursue these persistent discrepancies, and he is now paying the price for that decision.

              • Credit cards can help a lot. You don't use your bank account to make purchases, you use your credit cards to make purchases, and your bank account to pay your creditors. This does a couple things:

                1) It reduces the amount of transactions to and from your bank account to just a few, rather than everything you do. Things like your mortgage payment(s), car payment(s), and of course payments come from your bank account. Just about everything else is on a credit card. Thus fraudulent bank transactions are much ea

                • Silly (Score:5, Informative)

                  by Slashdot Parent (995749) on Monday September 01, 2008 @12:30AM (#24826467)

                  Seriously with a bit of work it shouldn't be hard to keep track of your financials these days, especially with instant access via the Internet.

                  You've obviously never seen a private banking statement. For fun, I pulled out my July statement. There were 3 actual transactions on it (not dividend/reinvestment), and the statement was 40 pages long.

                  These statements really scream "DO NOT READ ME". I'm just sayin'. (Yes, I read and understand my statement, but I can fully sympathize with those who cannot. I needed my banker to go through the first one with me page by page just to understand the thing, and I do not consider myself to be an idiotic or financially illiterate person.)

                  • Ok so (Score:3, Insightful)

                    by Sycraft-fu (314770)

                    Is someone forcing you to use a bank with statements that complex? Seems to me there's a lot of choice in banks out there. If you bank has statements that are too complicated, get a different bank. Now supposing that you have an extremely large amount of assets and for whatever reason necessitates the use of such a bank (as a note I know a couple of multi-millionaires, all use regular banks) then maybe you need an accountant. When things get complicated, you hire a professional. My parents own a small busin

                    • Re: (Score:3, Informative)

                      Is someone forcing you to use a bank with statements that complex? Seems to me there's a lot of choice in banks out there. If you bank has statements that are too complicated, get a different bank.

                      Nobody is forcing me to use that private bank, and I have no particular affinity for complicated statements (although I'm pretty sure all private banks have similarly complicated statements). The only reason I use my current bank is because that's where my portfolio manager works. If he moved, I'd move too. I spent months looking for one that I trusted, and now I have experience with him to validate that trust.

                      When things get complicated, you hire a professional.

                      You're preaching to the choir here. I have a banker, financial planner, portfolio manager, boo

          • by Slashdot Parent (995749) on Sunday August 31, 2008 @06:40PM (#24823557)

            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.

            That is because you are a retail banking customer.

            Private banking statements are incredibly complex. I should post one of mine just so you can see. I can see how if you did a lot of transactions (I don't), it would be impossible to have clue #1 what the hell was going on. Truly. And I am an economist.

            Personally, I have a manged portfolio at a private bank, but my day-to-day transactions are in a retail bank account for precisely this reason. My banker once asked me why I didn't take advantage of their transactional accounts and I told him because it would make my life too complicated.

            The guy in the article, frankly, should have had a bookkeeper, and that bookkeeper should have known what was up.

            • by rfunches (800928)

              Please, explain how "private" banking statements differ. My business banking account statements are laid out differently from my personal accounts (the former show credits, checks paid, and then debits; the latter is a chronological listing of all activity, line-by-line) but there's nothing extremely complex about it. Even my brokerage account statement is laid out in a categorical format (purchases, sales, current holdings, margin activity, etc.). What other way is there to lay out a bank statement other t

            • I'd love to know more details about this. A lot of people are saying that these statements are really complex, but nobody is saying how they are complex. Personally I don't even know what the difference is between retail banking and "private" banking, much less what a private banking statement actually looks like.

              I just don't understand how it can be so complex. I mean, any statement should have a list of transactions, and that transaction should have a date, an amount, and a description. If the transaction

              • by tompaulco (629533)
                A lot of people are saying that these statements are really complex, but nobody is saying how they are complex.
                I used to develop custom statements for banks, and I believe I know of the type of statement that could cause this type of problem. For their customers who had thousands of transactions each month, the statements were not more complex, but simpler. Rather than list out 3,000 transactions for the month, they simply listed for every day that there was any activity, the number and amount of debits a
                • That would explain it, but it doesn't really agree with what the article says:

                  "Mr. Wyser-Pratte said that the statements have become so complicated not even a Wall Street veteran like himself could detect the continuing theft."

                  This surely makes it sound like it's an overabundance of cryptic information, rather than too-brief summaries. However, knowing what passes for journalism, it's entirely possible that this guy was improperly paraphrased.

              • by Slashdot Parent (995749) on Monday September 01, 2008 @12:01AM (#24826293)

                Personally I don't even know what the difference is between retail banking and "private" banking, much less what a private banking statement actually looks like.

                Wikipedia [wikipedia.org].

                I just don't understand how it can be so complex. I mean, any statement should have a list of transactions, and that transaction should have a date, an amount, and a description. If the transaction is a check then it will list the check number. If it's an ACH transfer, then the description will be something about the nature of the other end. I simply don't see how you can make a list of transactions so complex that it becomes infeasible to check them. If you could provide some enlightenment on this then it would be much appreciated.

                No problem. I just pulled out my unopened July statement. The entire statement is structured so that you never get past the first page, if you look at it at all.

                To give you an idea of how needlessly complex these statements are, consider this: My portfolio manager manages, for my wife and myself, nothing more than our taxable investments, and one nondeductible IRA for each of us. That's it. So what do you think our statement looks like?

                For one thing, it is 40 pages long, and the front page gives your portfolio's total value and change since the previous month (what you really care about, anyway). Oh, did I mention that it's printed in such a way that you need to put it into a binder to even read it. The whole thing just screams, "DO NOT ATTEMPT TO READ ME".

                There is a ton of information in there, and it's all in abbreviations and shorthand. It's organized funny, and the actual transactions are difficult to pick out in between all of the dividends and reinvestments. The bottom line is once you are taught how to read the thing, you can understand it if you want to, but ... let's face it... if I really wanted to be on top of these things, I wouldn't be paying someone to do it for me.

                I actually do, at one point or another, read all of our statements and make sure there isn't anything grossly wrong with them. But I can't imagine just how long our statement would be if we used the private bank for our transactional accounts. They want us to, of course, but it will never happen.

                The real moron in the story is the guy in TFA's bookkeeper (he must have one, because I don't believe that the guy personally writes 1000 checks per month (33 checks per day!)). The bookkeeper should have recognized those unauthorized transactions and handled it. Surely the bookkeeper didn't believe that his employer ordered $300,000.00 worth of Dell laptops via ACH debits out of his personal checking account.

            • Be aware: Im in electrical engineering, not finance.

              From what I see, private finance looks rather nasty in the forms of increasing and decreasing net worth on each line item, per day. For example, you buy 100K$ worth of stock from XYZ corp. Tomorrow, the worth of that stock bundle is 110K$, you have to account for that increase. Obviously, many things can have a continualy shifting net worth.

              Another problem is unlike the public which has 1 deposit/2 weeks, they have consistent income stream inbound and outb

          • by jrumney (197329)

            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.

            In the statement for my share dealing account, for each transaction there are three lines, with alternating signs in front of the number. I imagine private banking uses the same or more complicated format on the assumption that all their clients have accountants to deal with that sort of thing anyway.

            • Well that's interesting, but it still doesn't seem all that hard to deal with. You're still just checking for transactions that are known or unknown based on what the thing says. Having three lines per transaction doesn't really seem to complicate it much.

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

          by mangastudent (718064) on Sunday August 31, 2008 @05:50PM (#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.

        • by Animats (122034) on Sunday August 31, 2008 @06:17PM (#24823385) Homepage

          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: (Score:3, Informative)

        by xstonedogx (814876)

        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... (Score:3, Insightful)

          by raehl (609729)

          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

          • by wellingj (1030460)
            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.
            • by tompaulco (629533)
              Accountants are also good at finding tax loop holes.
              I think you mean incentives put there on purpose by the revenue service in order to encourage businesses and people to spend or invest money in a particular way.
    • Indeed. (Score:5, Insightful)

      by xstonedogx (814876) <xstonedogx@gmail.com> on Sunday August 31, 2008 @04:51PM (#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: (Score:3, Insightful)

        by mysidia (191772)

        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

        • by crashfrog (126007)

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

          But he went in with the errors. Person B - the bank - told A to go fuck himself, they're the Great and Powerful Bank, and there's no way they could make a mistake.

          It sounds to me like A fulfilled his legal obligation. The statute of limitations on theft by fraud is ten years long, isn't it? The bank has no power to enforce a shorter limitation.

      • Re: (Score:3, Interesting)

        by hazem (472289)

        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

        • Sadly, it's because the bank has much more resources than the individual.

          Hmm. I don't think so. I recall reading at one time that if an unknown third party successfully impersonates you at a bank, the law is on the side of the bank. That's the bad news.

          The good news is that as a matter of reduction to practice, banks will quietly fix these problems for you just to avoid the bad publicity.

          C//

          p.s. these laws are one of the reasons its safer to use credit cards and not debit cards on the net...

    • Re: (Score:2, Insightful)

      by ishobo (160209)

      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.

    • by vicviper (140480)

      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

    • Re: (Score:3, Informative)

      by LostCluster (625375) *

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

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

    • The FDIC insurance of $100K has nothing to do with fraud. That's insurance against your bank going insolvent. When you deposit $100k in your bank account, and that bank loans the money to Billy Bob down the street in a subprime mortgage, and Billy Bob defaults, the FDIC insurance says your $100k is safe. The bank may not have your $100k anymore, but you'll still get it.

      The 50k that JPM is reimbursing the guy in the article is actually date-based, not dollar-based. The round number confused you. When th

    • by v1 (525388)

      as I understand it, the bank IS responsible. So if the bank can foot the 250k loss, he gets it. Probably will have to take them to court even though they are patently guilty. The insurance only covers what the bank can't cover due to insolvency. I doubt this bank can't handle a 250k payoff.

      It's like getting into an injury accident where the other driver is at fault and doesn't have insurance. It's ok if he's wealthy, lawsuit and you get your bills paid out of his hide.

      I think the main point of the insu

  • Moves (Score:2, Insightful)

    by Joebert (946227)
    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: (Score:3, Insightful)

      by russotto (537200)
      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.
      • by Joebert (946227)
        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.
        • by vicviper (140480)

          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.

          • by Joebert (946227)
            What's it worth to them ?
            • by vicviper (140480)

              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.

  • by mangastudent (718064) on Sunday August 31, 2008 @04:36PM (#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: (Score:3, Insightful)

      by Phroggy (441)

      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.

    • by caller9 (764851)

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

      Wonder how this happened.

    • Re: (Score:2, Interesting)

      by rprins (1083641)
      Wait, why don't they know the identity of the withdrawer?
  • Does this mean that your account number is enough to make a withdrawal from it ? No secret code necessary ?????? no card required ?

    • Re: (Score:3, Informative)

      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 scre

      • by polar red (215081)

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

        • Re: (Score:3, Insightful)

          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 sur

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

  • by Renraku (518261)

    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: (Score:3, Informative)

      by mark_wilkins (687537)

      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.

    • by Xuranova (160813)

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

    • by vicviper (140480)

      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.

  • 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 mont
    • by jfim (1167051)

      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"

      • by Free the Cowards (1280296) on Sunday August 31, 2008 @05:18PM (#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.

        • by Kjella (173770)

          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.

          And then is also the time some huge red warning lights should gave gone off that you need to get to the bottom of this. People not collecting their checks, that can happen but too much money disappearing out? Banks know addition and subtraction, it's very unlikely they miscalculated your balance. He was the only one sitting on the material to identify the unauthorized transactions, the bank couldn't have done it for him. The penalty here is harsh but it's not the bank's fault and I don't see why they should

    • by zonky (1153039)
      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.
      • by vicviper (140480)

        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: (Score:3, Informative)

      Or you could just compare expected balances.

      He did. He called to complain several times and was told that there was nothing wrong.

      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.

      Actually, you probably wouldn't have clue #1. Especially not the first month.

      If you RTFA, you'll see why. Private banking statements are really hard to read if you're not used to them. Hell, they're hard to read even when you are used to them.

      After my wife and I got our first statement, we had to go into our private banker and ask for a lesson on how to read the thing, and my wife and I are not financially illiterate.

      • by HuguesT (84078)

        Especially now, this is terrible publicity for JPM. They are on their way to lose a lot more than 300k.

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

  • Checks suck (Score:4, Insightful)

    by ed.markovich (1118143) on Sunday August 31, 2008 @05:05PM (#24822777) Homepage

    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

    • by Teun (17872)
      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.

    • by rtaylor (70602)

      For business purposes, I record all cheques that go out (value, cheque number, date) and mark the clearing date when the withdrawl appears.

      I can match both the exact balance in the account and also know exactly how much should be withdrawn as I know which cheques have not gone through.

      Being a programmer, I wrote code to extract data from CSV statements my bank sends me but it would not be too hard to find a part time bookkeeper/data entry clerk ($14/hour here) to do it by hand.

    • 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.

      I don't believe for one moment that if you went to your credit card company disputing a transaction from 15 months ago that they'd take you seriously.

      Second, checking accounts are difficult to reconcile as can be seen from the linked story

      What??? Using any decent program you should be able to tell what your current balance is and what it will eventually be. Besides which, additional funds were being removed so it should simply show up as unknown or at best duplicate transaction which, if you bother to keep track of your finances, should stand out.

  • 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.
    • by vicviper (140480)

      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.

    • by crashfrog (126007)

      Re:you have 30 days to complain about fraud

      Isn't the statute of limitations on fraud around ten years, or so?

      From what legal basis does the bank have to shorten that?

      • Statute of limitations has to do with the time when a criminal can be prosecuted for a crime. It has absolutely nothing whatsoever to do with when you can get a bank to reimburse you after falling victim to fraud.

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

  • 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 legitim
    • 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.

  • Moral of the story: go over your bank statements line-by-line every month, and question anything that looks funny.

    I check my bank account for unusual charges daily. I've only got one bill that can pull from our account and that's the local utility. They submit something like a bank draft every month. At least twice in three years I've gotten a call from my credit union when our water bill was unusually high and they wanted to confirm the amount. One of those turned out the utility misread our water m

  • from the article But once someone has certain routing numbers for a customer's account, fraudulent transfers become possible unless the customer carefully scrutinizes all of the transactions on the monthly account statement.

    those 'certain' numbers are printed on EVERY CHECK for that account.. WTF?

  • People don't do this already? Keep track of their bank account balance on paper (or in a text file on their computer)?

  • There's no reason why a bank can't be held liable for falsely approving a transaction that occurred over 3 months ago.

    Btw, don't ever sign up for freecreditreport.com, even after you cancel, they will find a bank account you own and start withdrawing money monthly from it as "CVTR3" or something like that. After you told them you canceled they will refuse. If you don't get your bank to block them within a timely manner, they WONT give that money back.

Their idea of an offer you can't refuse is an offer... and you'd better not refuse.

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