Hacker News Reader

Comment by nostromo | Hacker News Reader

I got burned by Aliexpress and now I highly recommend people use credit cards for all purchases.

I had a debit card saved on Aliexpress. The account was compromised by unknown means (maybe public wifi). Someone bought several $1,000+ phones from China that shipped to me in the US. I presume the sellers were in on it and were selling me unwanted inventory at inflated prices. Because they had tracking information, my bank (HSBC) said their hands were tied and I lost several thousand dollars overnight. It didn't matter that it was obviously fraud -- I provided customer service emails, logs showing the purchases all happened at 4am local time, and all at the exact same timestamp.

Moral of the story: don't use debit cards, don't save your cards online (save them in your browser and unselect "save this card"), don’t expect your bank to have effective fraud detection, and don't trust Aliexpress to have your back.

View on HN

Next time that happens, file a complaint about HSBC with the CFPB (https://www.consumerfinance.gov/). I recently had a problem with PayPal and it was resolved in days after I file a complaint with the CFPB.

Also, please don't bank with HSBC. They are the worst of the worst. You'd be better off with Wells, that's how bad HSBC is. https://www.icij.org/investigations/fincen-files/hsbc-moved-...

Funny how the banks are able to roll back at will when they are defrauded but when it is their customers they pretend that they can't do anything. I've seen transactions six months old rolled back because it benefited the bank.

Which is why I cringed at patio11's twitter thread where he insisted that the banking system is one giant kumbaya circle that works together to Do The Right THing

https://twitter.com/patio11/status/1443745867572277250

I've worked for a bank, let's just say that I can't agree with that. A US bank at that.

I just noticed:

https://twitter.com/patio11/status/1443756566822285334

I’ve worked for several us financial institutions, including banks and that exchange seems extremely typical to me. Especially the “hold harmless” bits. Which particular part of that story telling rang false to you?

The part where the banking system is a giant kumbaya circle run on gentlemen’s agreements to do the right thing. When you are clearly defrauded or scammed, banks do nothing about it. His entire thread advertises, “I’ve never wired money to a scammer”.

The thread seems to be saying banks get along with each other. It doesn't seem to me to be saying banks get along with their customers.

It's saying they'll drop everything to Do The Right Thing. Letting scammers walk away with easily recoverable money isn't the right thing, and doesn't benefit the banks either.

It didn't seem to be a Do The Right Thing story to me. To me it said they are nice to each other because they want to be on good terms with each other.

Scroll up [1]. The thread was him defending the banking system as being obviously superior, by this collegiality, to the crypto world.

If you're right, that his point was just, "between powerful agents within this platform, there exists a state of mutually assured destruction that makes them play nice", then ... well, that's not much of a defense.

The test of a platform is whether it defends the rights of everyone, not whether the few big-time power-brokers can defend themselves by such long-term game-theoretic threats.

[1] https://twitter.com/patio11/status/1443738002065268736

To me he's not saying banks are morally better, but rather that banks solve problems better than cryptocurrencies. He's specifically talking about what happens if the bank misplaces $70M. In most cases the other bank gives it bank, if not then they say "who cares" and declare it "ops loss".

You can save your debit/credit card, just don't save the CVV (if it is static). My debit card provider also has a feature to randomizes CVV every 5 minutes ie. for every purchase (I can enable or disable the feature). CVV is mandatory for online usage of debit/credit card.

The same provider also give 25 IBANs per account. I could, for free, put 25 virtual debit cards on them, and have the IBANs empty unless I put money on it. Good luck scamming me this way. After all, the accounts are empty except for a few min when I put money on them to spend it.

Random CVV sounds fun, but that's kinda in the same "fun only" space as port knocking in networking. There are real auth methods that solve this, i.e. 3D Secure.

> My debit card provider also has a feature to randomizes CVV every 5 minutes

What's name of your debit card provider?

Likely referring to the European neobank Vivid Money.

Bunq.

My solution to this is having a debit card connected to an account that has no funds and allows no overdrafts. And I only load the account when I specifically want to pay for something. I do this for everything, incl. Spotify, Netflix, etc. I pay a subscription when I want to pay for it, so usually at the end of the month I load the total of my subscriptions and they all go away. This also helps me keep track of my spending and is a good way to see how little things add up, like apple in app subscriptions. I do this religiously because once I was traveling in the winter and suddenly I had $200 disappear from my card and I was unable to get a cab/uber and almost froze to death. Had to get help from police officers. I swore to never again let anyone just take money from me without my approval, whether I owed them or not.

So you find my card in the wild, good luck.

How is this better than using a credit card?

Debit cards has orders of magnitude less fees per transaction. You might be fine paying 3% of your money to credit card companies but a lot of others would be fine with a debit card. The US system makes everyone share the burden of paying for credit cards, but in Europe they can't do that so people mostly go with the much cheaper debit cards.

Some people can't have credit cards bc they're not us citizens or permanent residents.

Some people can't control themselves.

I haven’t had anything this bad but always use credit cards online and maybe even in real life and pay off the balance as the protections are so much better - it is stupid really.

yes, never use your debit card and use only credit cards online, but cash is better for non-major in-person purchases as it's inherently private and anonymous. it's also better for the payee (hopefully a local retailer not a mega-corp), since they don't have to pay the fees. for major in-person purchases, the extra (fraud, warranty, etc.) protections provided by the credit card may be worth the privacy/anonymity tradeoff.

"non-major in-person purchases as it's inherently private and anonymous"

Most of the time that's an anti-feature - there is no point of hiding transactions of you buying bread, it could provide you an alibi in case you are accused of a crime, but there is no conceivable way it could be used against you.. (people don't stop to buy bread on the way to the crime scene)

how many common crimes are you committing for that to be your primary concern? sometimes you just don't want to share every single bit of purchase data with hoarders like visa, chase, kroger, and google.

> how many common crimes are you committing for that to be your primary concern? sometimes you just don't want to share every single bit of purchase data with hoarders like visa, chase, kroger, and google.

I think that GP is concerned with being able to show that they didn't commit a crime, rather than that they frequently commit them.

That said, I generally prefer cash for in-person transactions, not just for the anonymity, but because most smaller retailers pay much higher fees to the credit card processors than big ones.

An excellent example is NYC taxis. The CC processing goes through a couple different levels of "service" providers and the drivers get dinged for 5% on every transaction. Whereas a large retailer is likely only charged 0.5-0.75%.

Which can make a big difference for people like cab drivers. As such, I always pay cash for taxi fares.

You should consider wearing a gopro in public and stream at all times when you go out, that would surely provide you with an alibi /s

You joke, but we do that in high-risk environment, like driving in Russia (dashcams) or protesting.

Paying by card has saved my butt several times, when I was able to prove to a retailer when and where I bought a product for warranty purposes, or get out of a contract that had 2 weeks 'cooloff' period to terminate but the agency kept playing dumb and 'loosing' all my letters and emails.

Cash is wonderful too for tax evasion. Hence cash only businesses.

yes, but that’s a non sequitur. tax evasion via cash-only businesses is likely a rounding error on national receipts, and most of those businesses are straight up illegal (fencing, drug/weapons/human/sex trade, etc.), so justice is difficult/expensive and can be pursued more aggressively via criminal law anyway. we should worry a teeny-tiny bit about mom-n-pop taxes and service worker tips, and rather a lot about tax enforcement for big businesses and the well-off.

Where are you living that cash-only businesses are mostly illegal enterprises?

In the northeast there are tons of cash-only bars and restaurants (im sitting in one), food places (especially hot dog stands lol), and housing/plumbing/electrical contractors (friends with a few that offer _steep_ cash-only discounts).

Cash is king if you want to avoid government scrutiny.

Not anymore with the bank reporting coming up. Unless if you keep all the cash under the bed.

Right, it's hard to see what the advantage of debit would ever be. The guy at the bank always looks at me like I'm crazy for wanting just an ATM card and not a debit card, but between credit, cash, and checks, I cannot think of any situation at all where I'd want to use debit instead.

> Right, it's hard to see what the advantage of debit would ever be.

Not being able to indebt yourself is THE major advantage of debit card. Not everybody in this world is reasonable when it is about spending and finance management.

In some European countries with a more conservative mindset related to debts (Germany, France, ...), people will tend to have the exact opposite stance :

"Why would I ever need a credit card ? It is dangerous. My debit card is accepted everywhere"

There are a number of credit card issuers in the US offering 1.5% cash back.

Suppose you charge $1000 each month at the rate of about $33 per day, and also pay it off when the bill is due.

In a year, you've gotten 1.5% of $12,000 back which is $180, but you could also look at it as though they are paying you 36% per year to use (on average) $500 of their money.

The latter interpretation makes it seem irresistible to me.

And you pay 3% on every transaction to get 1.5% back. Seems like a pretty bad deal. Or do you really think businesses just gives you 3% for free on every purchase rather than raising prices on everything to make up for that 3% loss? A raw 3% of revenue is huge, there is no way businesses can take that without raising prices as consumer sales is pretty efficient and has small margins already. So they raise prices for everyone or they raise prices for people paying for cards, but either way you are paying more than you get back for that 1.5%.

> A raw 3% of revenue is huge

The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash:

- eliminates cash theft - always a chronic problem for business.

- reduces costs of transporting/dealing with cash

- improves bookkeeping and paper work

and it gains revenue by dealing with people who don't use cash. A large number of customers don't make routine purchases with cash, and these are higher income customers.

So the choice isn't "pay 3% on X or don't pay 3% of X" The choice is "pay 3% on X" or "don't pay 3% on .9X".

> The business doesn't lose 3 percent of revenue, because it also saves money not dealing with cash:

Debit cards circumvents the need for cash as well and are much cheaper. Everyone uses debit cards where I live, cash is very rare so companies doesn't need to deal with it much.

So the difference is really just a straight 3% vs 0.15% with no other consequences.

I think 3% is an exaggeration. And in fact, you can get 2% cash back. I don't think there's very much being charged when all is said and done.

This seems to show the fees can be considerably less than 3%, although PayPal or Square will charge nearly that:

https://www.fool.com/the-ascent/research/average-credit-card...

https://www.mastercard.us/en-us/business/overview/support/me...

That's an interesting point. I'm not aware of any POS payment processor used by business that accepts debit cards but not credit cards. Not sure why that is.

I think it is mostly that it confuses buyers and that confusion costs more than credit cards costs. You'd need regulations to get around this.

Except for a handful of businesses like cash stations, almost nobody raises prices for credit card users in the US (in fact I think their merchant agreements forbid this). So if I use cash I'm the sucker subsidizing everyone else's rewards points.

You're looking at it the wrong way. It's just a shell game to get around truth-in-lending laws.

Using a credit card is borrowing money. Interest rates have to be disclosed.

So the fees plus the grace period are a way of making it look like typical card users are not paying a lot of interest.

People getting cash back are actually paying low interest rates, because the market dictates it.

If the fees were prohibited, then not much of substance would change, except the numbers would all be higher.

Well, I live in Europe, use debit and the transaction costs are 0.15% with no hidden fees anywhere in the system. And that is the norm, I don't know of anyone who uses credit cards here. (Although we call debit cards issued by Visa or Mastercard credit cards since Americans call those brands of cards credit cards, but people who use them don't have any credit, your account gets deducted instantly and you can't buy if there is no money left).

I'm not sure why Americans say that credit cards with 3% fees would be better than this system, and make fun of Europeans for not wanting to use credit cards. To me it just feels like US finance industry tricked everyone into choosing the more expensive product since they hid the costs of it from the person making the choice. But when people has to pay the real costs of credit cards then basically nobody wants one.

> But when people has to pay the real costs of credit cards then basically nobody wants one.

I believe there is an opportunity cost for not using a credit card in US: you don't build your credit history. This might leave you disadvantaged in the future because... the finance industry (as an extension, the society) is structured in a way that you must have a good credit history.

I interpret your tone as suggesting the justification is circular and arbitrary, that finance doesn't serve a human need.

People can take loans all over the world, USA is the only country I'm aware of where you need to do stuff like use a credit card to take a loan. Don't you think it is suspicious that the finance market decided that the only way to get a loan is to first buy a lot of expensive finance products? It is kind of like how politicians are mostly lawyers, and they decided that the only way to ensure your rights is to pay a ton of money to a lawyer, is that just a coincidence? I don't think so, to me both of those seems very corrupt.

I didn't mean it in a negative way. I've never lived is US so what do I know. Just suggesting a reason for why people might want credit cards.

But you have a point with circularity and arbitrarity. Credit is basically about trust, and the thing with trust is that you already need trust to build more trust. When do you start trusting people to take loans is just as arbitrary as when a person attains the age of majority.

>I'm not sure why Americans say that credit cards with 3% fees would be better than this system

I don't know if you're trying to characterize my remarks above, but if so, this is inapposite.

I claimed the fees were a shell game, which implies having them isn't significantly better or worse.

If they weren't hidden, it would be clearer how much interest was being paid, but people who pay a low rate would probably still want to borrow.

I do feel like there is more fraud protection with credit cards as they currently exist, which is not to say that is specifically tied to a detail like fees not being regulated.

It seems all around logical and reasonable to me to want to pay a few basis points more in fees in exchange for fraud being someone else's problem. It's not just a fee for service, but also aligning incentives.

If your bank can take the position that fraud is (virtually) impossible, that's not just inconvenient when you happen to be an unlucky victim, but it minimizes their motivation to prevent anything that contributes to it.

People will go toward the option the system points them to, and in the US you don't pay extra fees for credit cards and have the best fraud protection with them. So why wouldn't you use it? Sure, I guess I might think twice if I had to pay a surcharge with every card purchase. But I don't, so why should I behave as though I did?

I’m not personally—and I may or may not pay cash if someone charges extra for credit. (But handling cash isn’t free.)

Yes, someone is paying for my 2% cash back card but it’s still a net benefit to me.

People misinterpret this as some sort of tragedy of the commons, but I think that's begging the question.

We (anyone/anywhere) could pass a law that said no more fees, and the credit card companies could instantly raise interest rates and end grace periods to compensate exactly. And then instead of cash back, they would have cards with much lower rates.

I don't see that anybody would be better or worse off, to first order. The difference is framing, and psychological response.

People look at stuff totally differently when it's divided into different buckets.

> the credit card companies could instantly raise interest rates and end grace periods to compensate exactly

I don't think you can simplify it that much. If you end grace periods, the people that currently don't pay interest will suddenly be charged huge amounts. If you drastically lower the interest rates to make their costs match the old model, then other people that pay the card off slower will suddenly be paying much less than before.

It's easy enough to ban fees charged to the business, and force them to be charged to the customer, to make pricing more transparent and remove the silliness around rewards. But trying to replace fees with interest rates doesn't work, unless you set up some crazy nonlinear '''interest rate''' calculation.

Yes. Grace periods are basically the only way credit cards work for business users among others. Four and five figure balances—paid off on time at the end of the month—are how a lot of people routinely use credit cards.

> the people that currently don't pay interest will suddenly be charged huge amounts

They will be charged the same amount if the interest rates are set accordingly, it will just be explicit.

>other people that pay the card off slower will suddenly be paying much less than before

You say that as if their rate must remain, if not fixed, in a fixed ratio with others. I don't see why.

>trying to replace fees with interest rates doesn't work

You might be right. But I don't see why, and I think that if I can guess a little, people in the industry know much more and are smarter.

Just as a nice round example number, let's say someone is effectively paying a 1% fee at time of purchase.

How do you turn that into an interest rate? Stuff at the start of the month and stuff at the end of the month are going to pay interest for different lengths of time. What if they change the timing of purchases?

Let's say you pick an average you're satisfied with. Okay, now you've calculated a rate you need to charge for the first month to match the old fee. You have to charge this specific percentage for the first month to make the math work out. ...but what if that percentage doesn't match the percentage you used to charge after the grace period?

One way to resolve this is to charge a first-month interest rate and a subsequent-months interest rate. But that's not really an "interest rate" anymore, is it? You're just obfuscating the fee, and the goal of this exercise was to make things more transparent.

The other way to resolve this is to have the "interest rate" change every single month, based on the timings of when you did all your purchases. This is just taking the old system and hiding it inside a black box, and that black box spits out an "interest rate" each month.

Unless I'm grossly missing something, there's no way to use just an interest rate to emulate a system of upfront fee plus interest rate. Do you have a suggestion of how to make the math work? Tell me what interest rate could replace "2% fee, 1 billing cycle grace period, 16% interest afterwards". Also tell me what interest rate could replace "0.5% fee, 1 billing cycle grace period, 16% interest afterwards".

>that's not really an "interest rate" anymore, is it?

If a grace period is ok now, why would it not be ok?

But if there has to be one rate per customer, sure, fine, why can't it be adjusted based on their minimum balance over time?

>Tell me what interest rate could replace "2% fee, 1 billing cycle grace period, 16% interest afterwards"

Option 1 would be to add (for the sake of an example) 24%, keep a sort of grace period, classify people in two groups.

  People who were eligible for 2% cash back now pay 0% during the grace period, 16% after.

  People who were not eligible for cash back now pay 24% during the grace period, 40% after.

Not exact numbers, just an outline.

Option 2, if they want to get rid of grace periods, they just separate people who usually pay off their balance monthly and those who usually don't and charge them the different rates.

> If a grace period is ok now, why would it not be ok?

Grace periods are fine! But you said get rid of them, and I was pointing out that you can't simplify the math that much. It ends up being a mess with a hidden grace period inside a bunch of confusing math, rather than an understandable and relatively stable interest rate.

If you're happy to keep grace periods, great, let's do that. And I'll skip the rest of the post because it's not worth fussing over in that case.

Not sure I understand that. I don’t really care about the interest rates under the current regime but of course I would care about lack of grace periods, cash back, and other card benefits.

I am more comfortable with exercising self control than with the idea that if my card is somehow misused I don't have access to my funds until it's straightened out. In fact, if you don't trust yourself, I'd say cash is even better, because the physical act of taking out the money makes you less likely to spend it frivolously.

A bit convenient at places that charge extra for credit card and carrying a chequebook is not always convenient. I just load it into Apple Wallet and leave it there.

> Moral of the story: don't use debit cards

I use a debit card for groceries and such. However, just to be sure, my paycheck goes to an account with no cards attached. I then transfer small amounts ($100 or so) every now and then to the debit card account.

This limits my exposure to card fraud, and also has the nice side benefit of giving me back some of that "spending feeling" that cash has. If I have to transfer say three days in a row it's noticeable and I can think about what I've spent it on, and maybe slow down a bit if I know I'm running low.

My wife and I do this, but we still got scammed. My wife's debit card got skimmed, and there wasn't much money in that account but it gave the thief enough info to do a social engineering attack at the bank (USAA in this case). Took several calls before they found a cooperative representative, but they managed to convince them to reset the password, tell them the username, reset the PIN, and disable the two factor token (which is a Symantec app that runs on a smartphone). When the bank fails this badly, nothing can really protect you.

Sure was an awkward call with the USAA security department after they worked out the exact timeline and actions of the attack. They didn't really have much to say in their own defense. Cost them about five grand in the end. The really annoying part is that now if my wife needs to call them for anything on the phone they make her jump through many hoops to identify herself. E.g. she has to answer the credit bureau-based questions every time, plus a PIN, plus a phone password. We may move banks just so we're not stuck with an online-only relationship because of this experience.

A waste, get cash back on credit cards for grocery, 3%. Not shocking or great, but 3% on an annual bill of $10,000 is a nice $300, maybe a week of free groceries?

Paycheck to cards not attached does not matter, ACH transfers can still be done much easier vs a EMV/Stripe read of a debit card.

So all you are doing is amplifying your risk without any reward.

Wife picked up the Amex Plat right before the signup offer & annual fee changed drastically this year, offer was 10X on the first $15k spent on gas & groceries and 100,000 points after spending I think $6k within 6 months.

Only using it on gas & groceries, will average 16 points per dollar (approx 12-16%) when we reach $15,000 spent total.

The new deal is similarly structured but horrible in comparison, “shop small” is the category so it’s not realistic to max out the bonus spend without overspending.

What if you overdraft and then get hit with fees? Or even NSF fees?

My bank doesn't allow overdrafts beyond $10 or so, no fees except a few percent in penalty rate if I keep it negative for a while.

There are some edge cases where one might overdraft more (delayed transactions IIRC), but again no fees.

> Because they had tracking information, my bank (HSBC) said their hands were tied...

But a lawsuit might untie them. That said fraud can sometimes be too hard to prove.

I got burned by Ryanair at the start of the pandemic. I'd paid something like £2,000 for flights, and for months those scumbags refused to refund me.

I'd paid with a credit card, so I asked my card provider to do either a chargeback or section 75 (I forget which) to force a refund, and the money was back in my account within a couple of weeks.

I had a hotel double charge me a number of years back. I called the hotel to straighten it out and got some run around. So, I called my bank (USAA) to ask what I should do. They said “do a chargeback and that’ll force them to show documentation”. “Okay, I’d like to chargeback one of the transactions.” “We’ll just do it for both and let them sort it out.” Hotel never responded at all, so the entire stay was free instead of just being the correct amount.

My Citi Dividend 1% Cash Back card allows me to create Virtual Cards for such things.

Any other cards anybody can recommend?

Capital One has that, and Paypal.

Capital One has that

Sort of.

Do they still require using Chrome for that feature?

Fuck Google, I'm not about to use them for that!

Use Chromium. Also you should use several browsers anyway.

Privacy.com - I use it for any recurring payment or overseas purchase

Reply on news.ycombinator.com