> One of the reasons I covered the checks as a payment method recently was to lay the groundwork for talking about some of the fascinating alternative financial world around them. In the main, this helps people at the socioeconomic margins turn payroll and other checks into cash (or otherwise immediately spendable value) in return for a fee. This is not how you, reader, probably deal with checks, and the existence of this industry / product have been controversial for many years.
So what's funny is that the topic is actually totally alien to me. But that's because I have only ever dealt with one or two checks in my life (when interacting with an American company paying interview expenses). And otherwise, I've never handled them at all. They just have been out-of-use in my parts of the world (Europe, Singapore, Australia) for at least as long as I've been economically active in them. From what I've heard, the US is going in that direction as well? So many younger people would have never handled checks there either?
But the paragraph just assumes that you would be familiar with checks in general, but not with check cashing. (Later on in the article, our author explains the basics of how well-enough-off people handle checks. So that's fine.)
Edit: reading further down, I'm ok with the tone of the article and don't share the concerns.
I was speaking from personal experience within a cultural context, so your perspective doesn't apply. Whether or not you've relied on paper paychecks in the US has far more to do with socioeconomic status than age.
If you want to check my 'poor people credentials': I grew up on welfare in (mostly former) East Germany. Nowadays I live comfortably as a programmer.
Poor people don't use checks in Germany. Some rich people might (still) use them for idiosyncratic reasons.
As for the benefits I just alluded to, they are in no particular order:
* Simplicity and security. You cut someone a check, it's effectively the same as handing someone a wad of cash but without the logistical, security, and social issues associated with handling wads of cash.
* Convenience. Checks are easy to use and require nothing other than a pen compared to other forms of transferring money, such as wire transfers or debit cards.
* Assurance. Cashier's checks are a special kind of check guaranteed by the underwriting bank. These are often used when large sums of money need to exchange hands with no hassle or problems (eg: real estate or vehicle purchases).
Disagree about the security. I just found out last month how unsecure the use of paper checks actually are because they expose your bank account & routing number.
I had an old checking account that was dormant and I hadn't written any paper checks against it for 10 years. What then happened was a landscape service asked me for payment for some work so I had my credit-card ready to settle the bill but they surprised me by saying they would charge extra 3% fee for processing the card. However, they said there was no fee if I paid by paper check. I didn't want to pay hundreds extra in fees so I used that dormant checking account to pay them with a paper check. They cashed my check the next day and I didn't think anything about it.
About a month later, I saw a mysterious "e-check" that subtracted money from my dormant checking account! It was not ACH; it was a generated e-check from a billing service popular with adult companies. So somebody from the landscaping company used the numbers on the bottom of my paper check to generate a fake digital check. The thief was on a website that let you pay for a subscription by creating an echeck; the web form would have fields for entering anybody's bank routing # and account #. (Example: https://solutionscout.com/payment-processing/e-check/)
When I talked to Bank of America about the fraud, I asked the customer service representative if there was any security setting that would prevent fake checks like that from deducting money from the account. He said "no". The fake e-check even had a totally bogus check # that was out of sequence with my real checks and he said their system doesn't verify the sequential #s. Literally, you're powerless to stop it and the only thing you can do is let the fake e-checks steal your money -- and then later file a fraud claim hoping to get the money back!
Paper checks are flawed with a critical security hole by letting companies generate fake e-checks. This means the more paper checks you write and release out into the world, the more of your banking surface area is exposed for you to become a victim of fraud.
Paper checks are useful, if you have various accounts with different banks. You can write a check for yourself to move money around.
Even mailing personal checks is not secure, as they are stolen. Even postal employees are involved in this [1].
[1] https://www.nbcnews.com/news/postal-worker-3-charged-24-mill...
Not sure what good that would do. I keep a few checks in a travel folder and have a couple pads of checks in different places around my house. I don't necessarily write checks in sequential order.
Yes, they're not very secure. It's also a system that generally works pretty well for a lot of people. And, yes, it's a good idea not to keep an excessively large bank balance for a variety of reasons.
Yes, I understand that scenario where the checks are not written in exact sequential order by the account holder -- nor are they presented to the bank for clearing in exact sequential order by people trying to cash them.
However, when the last real check I wrote is sequence #3374 and the fake e-check hitting my account is sequence #1687557289469, that's an arithmetic difference of 168 billion checks!
We're not talking about a fudge factor difference of +/- 50 in check numbering because real people write paper checks out of sequence. We're talking about basic sanity checking for fraud. E.g. Do bank account holders typically write billions of checks such that the simple subtraction of 2 different check sequence numbers is billions apart?
Here's the crazy part... The Bank of America website UI for online banking already visually warns you when it detects a out-of-sequence check # gap! It just doesn't use that existing logic to stop payment on an obviously counterfeit echeck.
So a valid check is presented to my bank with sequence number N and cashed. Another valid check is presented with sequence number N+10000 and refused. So now I've got to pay a fee to the second vendor for the returned check, they probably won't accept a check from me now so I've got to pay with a credit card and there's a decent chance I'm paying 3% more for that pleasure. So the bank trying to be helpful just cost me $25-50+3% and has done nothing to prevent actual fraud from occurring - I would not be using that bank for very long!
The guy at that landscaping company already committed a bunch of felonies, it's computer fraud, bank fraud, probably one or two others. Not sure what the bank wasting its efforts trying to combat this would accomplish.
It would prevent me from losing my money! I filed a fraud claim form that also required an affidavit with notarized signature and Bank of America still won't return the stolen money. That money is gone.
>The system you're envisioning whereby banks refuse payment on otherwise valid checks based on Reasons seems a lot crazier.
My point is that BofA computer systems already have some aspects of "suspicious activity" algorithms and heuristics in place to prevent counterfeit checks stealing funds from the account. The banks are already "wasting effort" as you put it to try and distinguish real vs fake checks. E.g. When the landscaper tried to cash my legitimate check that had my handwriting and my signature, the bank sent me a phone alert which I then had to explicitly approve. Otherwise, they would reject the check. (An example of "Reasons" as you put it.) This is what the verification alert that requires explicit approval looks like: https://imgur.com/a/62dCsBx
But the next check a month later that someone faked, with a weird sequence #, without any signature, and the "payee" to a company notoriously known for unauthorized checking account withdrawals and fraud... No alert for my approval was sent; instead, they just went ahead and paid it.
If the banking system allows 3rd parties to fabricate e-checks with no verification, they should also offset that dangerous power by allowing account holders the security tools to stop those types of echecks from being cashed. E.g. a smartphone approval step.
As someone who was previously a customer of Bank of America and suffered my own form of theft and fraud (I was pickpocketed and someone used my debit card illicitly afterwards before I could cancel it). I can tell you with an absolute certainty that your experience is very specific to Bank of America or large national banks generally and not any sort of rule or law.
Do yourself a big favor and close your accounts with BoA and join a local/regional credit union. Nearly a decade after my first incident, I had another issue and the experience and how I was treated by my credit union vs how BoA treated me were worlds apart.
Either one will require an affidavit, the credit union offers members a free notary service at any branch so I simply filled it in person at a branch. The affidavit is to protect the bank by ensuring you are liable for false statements. The credit union also helped me pressure the police to actually do something, which resulted in three arrests of a group of teenagers that had more than 800 stolen cards in their possession when arrested. And I had the stolen funds returned to my account the same day at the branch, good as cash.
In that interim decade I stopped carrying a debit card and only used credit cards because of how badly my experience with BoA was. I now know that it’s not the card you use, it’s the /bank/ you use that makes the difference.
When I last used checks (about 30 years ago?), my sequence numbers would vary by that much because I used them to encode metadata about the check. Only the last 3 digits were actually a sequence number.
You don’t need to spend millions of dollars engineering an electronic solution to this problem, you just need a legal agreement between the broker and the landlord allowing the broker to accept the deposit on the landlord’s behalf. That’s not exactly a stretch.
I don’t even know my current landlord’s name, to be honest. It’s on the lease, but my deposit and rent go to the management company that maintains the building.
Receiving a fake cashier’s check, or the opposing party hacking into your bank and showing a transaction that will disappear?
Regardless of how unlikely the fake cashier’s check is, a fraudulent electrinic money transfer is still more unlikely. And the electronic transfer is cheaper (free). And less work for everyone.
As far as I know the only way to execute an immediately-settled electronic transfer is a wire transfer, which is inaccessible to lots of people and has an associated fee for nearly everyone else.
And Zelle obviously has a lot of limitations, such as being for smaller amounts of money so not useful for down payments or such, I was referring to checks versus electronic payments as a concept in general, not the US’s specific implementation. Which there isn’t one, but due to political failure, not technical limitations seeing as how every other country has the capabilities.
Zelle transactions are subject to reversion or cancellation ... for days?
Compare to, say, settlement cycles in SWIFT: https://www.swift.com/news-events/news/preparing-t1-global-i...
You can't just unilaterally reverse a Zelle payment any more than you can a SEPA transfer.
However there is possibly some new "real-time payment" feature of the ACH network that could be equivalent to wire settlement, but I'm not sure Zelle actually uses it.
There's also FedNow[2] but I don't know of any retail implementations yet.
Convenience: will be superseded by FedNow. Is already superseded by various apps.
Assurance: cashiers checks aren’t really relevant to this discussion. They’re not the same as a check, they might as well be a different product entirely, and they generally cost money to use for everyone except those who have fancy high value bank accounts.
I expect they will just become obsolete slower in the USA than other parts of the world.
Personal cheques are already obsolete in my country (New Zealand). And their usage looks to be sharply declining in European countries: https://www.statista.com/statistics/443677/cashless-payment-... or countries are trying to stop their usage (UK, Australia).
https://www.statista.com/statistics/1055578/check-usage-by-c... implies that the USA likes checks. 30 years ago NZ had over 50% of transactions by cheque.
Yes, checks have important benefits but the downsides (fraud, processing costs, credit risk) lead to them becoming uncommon and then obsolete in other countries. No reason the USA will be different.
Though I was surprised a couple years ago when I bought a new car. I thought I'd have to run to a bank branch to get a cashier's check to pay the balance (as I've had to do in the past). They were fine with just a personal check. I assume the finance guy had some means to verify I had the balance in my account.
I don't assume that.
Every dealership has their own policies. My guess is nonpayment on personal checks for car purchases is such a low occurrence that they are willing to take the risk of just assuming that the check will clear. Plus they also (in my state anyway) register and title the car on behalf of the DMV so they have all your information.
When I bought my car I said I needed to move the money into my checking account before I wrote a check. It was from the same bank so it was instant but they replied "no problem - do you need us to hold the check for a couple days then?"
The amount of trust people are willing to place on a piece of unauthenticated paper is astonishing.
There are kinds of check fraud people get away with it, but none of them involve legal names and an address to send a summons to.
Even the US government requires cashier’s checks, not personal checks, for passports.
>Worst case, they take the collateral (house, car) back and get to sell it again.
Worst case is the asset gets trashed or stolen and not recovered, and the seller spends a ton of time and money in court to find out the buyer has no assets to recover from.
Edit: I was wrong about the US passport needing a cashier’s check. It was probably for a travel visa, so a different country requiring it.
This must be a new policy - I wrote out a personal check for my passport.
And a big downside of checks is that it reveals your bank account and routing # in an ACH system where money can be “pulled” anytime from your account. Compare to an electronic money transfer system where money is pushed from entity to entity using a unique identifier, but can’t be “pulled”.
I ask because there is, as far as I can tell, no obvious way to do it. You could just as easily write an essay talking about carrier-provided phone financing, and it would expose a similar cultural rift where most Americans don't do that and are only very vaguely familiar with how it works.
Or is the glaring thing that you dislike here the clearly stated assumption that most of the readership is not like you? In which case perhaps we should simply request that authors not state such assumptions while they make them anyway in the interests of being maximally informative.
https://www.propublica.org/article/the-expendables-how-the-t...
Do you think this article is ineffective?
Moreover, a similarly sympathetic (and horrified progressive middle-class-assuming) portrait of a check cashing business and its customers would almost certainly read as incredibly condescending to someone who finds them a fact of life. The article quite clearly assumes its readers have never been temps, never been crammed into a van to work in a warehouse, and will be upset to learn the conditions in question. It just doesn't say so briefly, opting instead to bury the assumption.
Do you want to read an article that portrays your younger self as a victim so that readers can feel bad and maybe learn about the financial structure of check cashing? At the risk of making a large assumption, that does not seem like it would help you feel included.
Technology was supposed to reduce these barriers, but in a lot of ways it has magnified them, creating a new pseudo social caste system or perhaps just an extreme shift in the existing order. Noticing that the promise of the 1990s has fallen flat they turn to blind pushes for inclusion as an embarrassed justification for their position in this new order.
Suppose a business or individual accepts checks and electronic funds transfers for payment.
Are they going to apply their prior probabilities (your various -isms such as racism, etc), in regards to whether or not the payment will actually be successfully received?
Whereas an instant payment and confirmation via the use of internet and databases alleviates this motivation to discriminate.
> Compassion gets burned out of the owner and burned out of the clerk in basically the same ways that it gets burned out of everyone else in the neighborhood.
This reflects a false belief that people who live in poor neighborhoods are less compassionate. In fact research suggests that people living in poverty tend to be more compassionate towards each other than rich people are toward the impoverished. It's comforting for wealthier people to hold this belief, because it makes us feel less bad about our own lack of compassion.
And the point of the below paragraph seems to be that it's difficult or unpleasant to think about systemic injustice, so let's avoid it?
> And, not to put too fine a point on it, it’s really hard to expressively, passionately hate this business and not hate the young lady working in it, the decisions and life challenges of its customers, and similar. And if you hate one particular building in a poor neighborhood, and then start rigorously thinking about the liquor store, or the police station, or the supermarket, or the church, or the public school, or the home in the poor neighborhood, I think your mind will start going to some pretty dark places.
From what I recall, its less that the poor are more compassionate, instead they participate in _reciprocal altruism_ as a form of insurance against further loss. I remember this talk https://www.youtube.com/watch?v=AchISJUKfH4 -- poor people make seemingly dumb decisions because if they don't help their social network when it comes knocking, they're in effect _cutting themselves off_ from said network.
The middle class is more insulated from this effect because those with emergency savings don't often need to borrow $500 because of a broken car or need to house their recently homeless sister and children, so capital can accumulate more easily.
So the author is being anti-inclusive by defining precisely what they are talking about? I assume you've seen the XKCD about "15k people a day dont know what X is", you're committing the same elitist reasoning, that someone is an idiot for not knowing a thing.
Explicitly stating unfounded assumptions about your audience doesn't change the fact that they are unfounded assumptions. A whole hell of a lot of people in our country have relied on check cashing services regularly at some point, and believe it or not, many of us read blog posts just like them proper folks from polite society.