A Man Walks into a Bank
ft.com
ft.com
Of course, you couldn't do this too often before they caught on to you.
edit: I have no idea how depositing cheques (checks for you Americans! :D) works here though.
China is also the only country I've found myself in possession of counterfeit currency. Sigh, I guess I should just take the loss of 100 RMB but I keep thinking a little luck in a taxi could keep the system flowing...
Basically it wasn't an ATM but a Nightly Drop box that allowed them to declare the amount of money they were depositing.
You deposit the notes and the machine scans and count everything you deposited and gives you the number. If you agree, your account is credited.
I guess you could design fake notes that pass just the ATM...
In a nutshell: a guy had setup a corporate bank account, which at this particular bank enabled him to use a "nightly dropbox" in which you declare amount of money, then put it in a bag and put it in the dropbox. These bags are not scanned before your account is credited (I know, it's insane), so guy just withdrawed the money and dissapeared.
It's not insane, it's incredibly efficient. Our whole "system" operates on trust. You can certainly find holes in the system if you so choose.
But don't kid yourself: these losses are built into the profit expectations of banks. And they'll try to catch you. If you want to be on the lam for the rest of your life for a million Euros, have fun.
In germany (I dont know about the rest of Europe, but I guess the situation is similar), cheques are virtually non existent. You can still get and cash them, but you will get weird looks from the person behind the bank counter, most of the time there will be a hefty fee associated with it(I once cashed a cheque from an US-bases affiliate program and my bank charged me a ridiculous amount for the process).
To transfer money from person to person, the only information you need is their bank account number and name. As far I can tell, there's no way that you could use the account number in a malicious way (which is why charities and companies can publish their's with no repercussions). With the introduction of SEPA and IBANs, this now applies to the entire EU.
What's more, credit and debit cards are accepted almost universally (with a few exceptions), which means that I hardly ever carry cash with me.
I think you can get a cashier’s cheque if you really need to, but I think cheque books have completely disappeared (I don't even know if I could get one if I really wanted to).
In the US, domestic bank transfers cost money (for example, Bank of America charges 3 dollars for ACH and 25 for sending wires; most banks charge 15 for receiving a wire), which explains to a great extent why cheques are still used.
"What's more, credit and debit cards are accepted almost universally" -- credit card fees are onerous
"I think you can get a cashier’s cheque if you really need to" -- did that on Friday. 8 bucks.
Credit cards are issued by your bank, you pay one yearly fee, 175DKK around 30USD. More often than not the bank will give you a VISA debit card for free, or a Master Card with 30.000DKK limit, no interest if you pay the debt of each month (The bank will do the transfer from your account for free, assuming that you have the money of cause).
Paying bills online: Free Domestic bank transfer: Free Credit card / debit card: Free or fixed fee Getting a check made out: Pretty expensive
However, the recent Dodd-Frank Act limits that - merchants can give a discount for using cash and allows them to set a minimum amount for credit cards up to $10.
>http://www.bloomberg.com/news/2012-07-13/visa-mastercard-set...
>The agreement, which provides for a temporary reduction in rates for merchants and allows them to impose surcharges on customer purchases, follows a seven-year legal battle with U.S. retailers that accused the two largest payment networks of conspiring with banks to fix swipe fees, or interchange.
Which is why I feel like a dick if I ever have to use my credit card for a sub 30kr ($5ish) purchase in a small business.
In Poland (although we're a much smaller country), wire transfers cost from free to 30 cents (doesn't matter how much you send, you could wire $1M and still pay 30 cents), and take from an hour to a working day to process.
Here are the specs: http://www.frbservices.org/campaigns/remittance/files/fedwir...
I also have a free EFTPOS (Maestro/Cirrus) and Visa Debit card, and can pay bills at no extra cost using the BPAY system from my online banking, so I never write cheques at all...
In particular they tend to be used for small businesses, associations and the like because they won't have proper accounting systems set up to track transactions. The cheque stubs form a useful source document for book keepers, accountants and auditors.
Also, a chequeing account can have a requirement for multiple signatures. This matters a lot for partnership-style businesses and of course incorporated and unincorporated associations. Indeed most model constitutions for incorporated associations specifically mention the chequebook, who possesses it and who must sign cheques.
Even so, it's dying out there too. Bank statements have gotten progressively more descriptive as time goes on. Plus the banks are grasping thieving mongrels who use "but it's paper" as an excuse to slug you for stunning fees for every node in the state chart of cheque deposits.
I have cheque books and deposit books for my Pty Ltd accounts and I have never had occasion to use them. I pay bills with the corporate credit card and since I deal with large creditors they prefer to convenience and reliability of direct deposits.
I suspect that it was a bait and switch attempt to phase out branch banking. I.e. make it free until everyone switches over then start charging fees. But it backfired.
I was going to try some new method (PopMoney?) to pay my roommate for rent and utilities, and then I noticed it cost $1 per transaction. Back to paper checks (= free).
It's not the fact that it costs something - a dollar is no big deal - it's the fact that the alternative is free.
The cost of a stamp and the free non-personalized checks from my bank end up being cheaper than paying Western Union every month for the "convenience" of online/electronic payments. My landlord also lives out of state and is an individual, not a large company, so I send her a check every month by snail mail.
You're right, the actual dollar is no big deal, but I continually write their annual survey with remarks about how my Gas Company's online bill pay sucks. I'd rather not pay fee upon fee to do business with a company that feels the need to continually lobby the government for the right to add more fees. Everyone else gets by without having to charge extra for 21st century banking methods.
It works fine for the "paying utility" case (or "mailing combined rent check"), but it feels kind of silly when it's for transferring money to my roommate who lives 20 feet away.
Bank transfers here are free, but the recipient has to give you their account number & sort code, so you might use a cheque to give money to a friend. Private landlords might require the rent as postdated cheques. If you send a membership form by post, you might be able to enclose a cheque to pay for it, though it's more common to set up a direct debit.
looking at all the people protesting the proposed removal of cheques in UK last year I'd say that's not the case :-)
Sadly many (relatively) big business and countless public bodies only pay and accepts payment by cheques. As an example only this year City of London Corp started accepting bank transfers for rent deposit. 2 years ago I had to dig up my business cheque book and bring a cheque to their offices for an office rent deposit.
Take a look at the "Treasury - Written Evidence - The end of Cheques?" http://www.publications.parliament.uk/pa/cm200910/cmselect/c...
You are required to have direct deposit where I work and I only write checks to individuals or to businesses that don't accept debit/credit card transactions.
This story took place in 1995. Some things have changed in the last 17 years.
In the UK for example, they've just introduced FPS for all small transfers (around £0-£100000, varies with the bank) - this transfers money almost instantaneously between two bank accounts, is low risk as it uses the existing electronic transfer systems, and is free to use. This suits the customers as it is free and very quick (usually within seconds), and suits the banks as they don't have to keep all of that pointless paper around, process cheques, verify signatures etc etc.
There's talk of getting rid of cheques sometime in the next decade in the UK, because hardly anyone uses them any more, I think the first date proposed was 2018 though they've now put it off for a bit.
I don't personally, but there's lots of accounts in these comments about systems in other countries that have free or nearly free near-instant wire transfers provided bank account number and name. Charities soliciting donations include their account number in ads. If you don't have a bank account you can make a deposit into the account at the post office. It doesn't get much simpler.
> Also, many banks now allow cashing photos of checks.
Yeah, but until you can "sign" an image of a cheque and email it to the recipient - and I'm not sure if that'd be technically a valid legal cheque in the U.S. - a physical copy must exist at some point.
This is currently expensive with american banks because use of checks is so wide spread - that might work.
> If you don't have a bank account you can make a deposit into the account at the post office. It doesn't get much simpler.
I guess.... and yet, I prefer checks for A) having something physical to document, B) being able to give people non-cash physical money. I guess something like a cashiers check would also serve this purpose, and C) avoid using online banking software, which is atrocious. I can't use more than 10 characters per password, and my default one is 26 characters. I don't trust billion dollar companies with securing my banking information. If people want to take my money, they'll have to make an effort and go through my trash.
So I do trust cheques more, and I have more options if a bad check is charged.
[1] http://en.wikipedia.org/wiki/Check_21, http://en.wikipedia.org/wiki/Remote_deposit, http://en.wikipedia.org/wiki/Cheque_truncation [2] http://en.wikipedia.org/wiki/Substitute_check
They just looked at me like I was mad and said "nobody uses those any more. Just use your bank card and withdraw cash in ATMs as needed".
They literally told me that nobody (as in "no banks", locally) did checks anymore and that they could not be issued even if I wanted them. This was 10 years ago.
So yeah. US banking is stone age.
And at the same time the US is the world leader in electronic, financial trading with millisecond-trading (microsecond-trading?) being the norm among the big trading companies.
It really doesn't make much sense.
It's complete crap, and a total racket. Unless I want to pay >$50 month for the luxury of paying my bills in any modern way, I'm back to writing checks.
On the other hand, rent in Japan is usually paid by bank transfer at $6 per transaction (done at the ATM or online). Checks, in the USA, are free, no transaction fee
Checking the newspapers from that era I find several stories that were all based on the same AP wire story. Here is one (or search news.google.com for others)
http://news.google.com/newspapers?id=2UlWAAAAIBAJ&sjid=G...
http://www.nytimes.com/1995/10/04/us/fake-check-story-ending...
A few things about this.
1) From what can find there is no attempt to verify anything with any bank. I understand that banks aren't going to want to trot out that this happened. But at the very least good reporting (this was also in the NY Times) would require verifying that it actually happened, even with a "no comment" from the bank or the attorney.
2) The type of career he decided to pursue. He wrote a book about "Make College Easier, Beat the System and Get a very cool job".
3) The fake check has a micr on the bottom for the amount. But you don't get cancelled checks with micr, the person who wrote the check does. The photo byline clearly says "Patrick Combs's fake cheque, which arrived as junk mail"
4) The micr says "95,093.55" and the check is for 95,093.35.
5) I haven't checked the routing number but there is no mention of the bank that the check was drawn on.
Frank Abignale only had to get past an initial look-test so what techniques protect against (and are consistently used) to prevent cheque forgery today?
1. Obscurity : Someone has to know your account number and routing code.
2. ...
Ah, make that just one thing preventing fraudulent checks. It's scary. Any legitimate check, for any amount contains enough information to create a fraudulent check to drain a bank account.
"Nowadays almost everybody knows that it's dangerous to reveal your credit card number, or to have that full number on a printed document that somebody might find in the trash. Soon people will learn that it is equally dangerous to reveal the numbers that are printed in plain sight on every check. Forget signatures; banks have no time to verify them. The once venerable system of checking accounts is irretrievably broken. Before long, companies will find it impossible to give out paychecks without exposing themselves to unacceptable risk.
One consequence of this debacle is, alas, that I can no longer write checks to reward the people who discover errors in my books. The system that I've been using has worked well for almost forty years; but recently I have had to close three checking accounts, and the criminal attacks on those accounts have caused significant grief to my bankers. (Certainly I do not believe that anybody who received one of my checks has been in any way a culprit. But all such recipients are entitled to bragging rights; therefore the numbers printed on those checks inevitably become known to random members of the public.) I cannot in good conscience continue to traumatize the people at my bank, who obviously have plenty of other things to worry about."
Once it all came to light, the bank then sued my friend and drove him into bankruptcy.
Fuck banks
Quote:
Manuel went on to inform me of things that further amazed and intrigued me:
* According to Commercial Paper Law the money was now legally mine, because all checks are first assumed to be valid -- and the way a bank invalidates a check is by serving the depositor with a timely notice of dishonor. Considering that it took my bank 33 days to tell me my check had been returned, he did not think they had dishonored the check in time.
* Fraudulent checks ARE a different manner. But he said, "Since you deposited the check 'thinking there was no chance it would cash, and without even endorsing it' -- you didn't commit fraud."
* Getting the cashier's check was also not an act of fraud, since the bank had previously assured me the check could no longer be returned.
* There are two practices of law as seen through the eyes of a court: (1) Black Letter of Law, where the court rules strictly by the law (and I would be awarded the money) and (2) Chancery Courts, also known as Courts of Compassion, where the court disregards the law when it is deemed non-sensical. He said that, "Easily a court could disregard the law and give the money back to the bank because really you have no claim to this money from an equitable sense of the law." And then he added, "And when it's an individual vs. a Bank, I'm sorry to say that courts usually side with the bank."
> But he said, "Since you deposited the check
> 'thinking there was no chance it would cash,
> and without even endorsing it' -- you didn't
> commit fraud."
I don't know if that's enough to avoid fraud.
In England he'd have to pay back the cash, and any interest earned on the cash, and he'd have to have good lawyers to get off any criminal charges. I think; IANAL etc.
Check gets deposited in ABC bank (issued by XYZ bank). ABC bank sends a scan of the check to XYZ bank. And XYZ bank has an employee whose job it is to look at every inbound check to make sure the signature matches? Or maybe they have computers to recognize the signature and compare them for similarities. If it's too different, then it's flagged and sent to an employee for further review?
I suppose it's possible that this happens. I honestly have no idea. Next time you write a check, sign it "Snoopy" and see if it still clears. My guess is that it would.
Yeah, that'd be nice, and I think it's well within the grasp of the big banks to deploy some image recognition software to do this, and yet I'm fairly certain they do not. Anecdata to follow...
I recently had a blank check stolen from me and filled out with a completely fake looking signature, it was really almost cartoonish. Yet the bank (Chase) did nothing to stop this from being deposited by the thief, and debiting my account. I only found out a month or so later, and filed a dispute, which they resolved. But the only reason I noticed it was that I don't use checks very often, so even though the amount was not an outrageous sum, it stood out. The bank's suggestion to me, for the future, was to NOT USE CHECKS. Ever. The low level employees at the local branch, when I was there closing the account and opening a new one, told me NOT to order checks at all, and pay rent with a direct transfer or bill-pay feature.
This is what people mean when they say the only innovation in consumer level banking is improvements to ATMs.
The fact that checks are not anywhere near as secure as I would want (or apparently the bank's own tellers would want) just irks me, since they're much more convenient than bill-pay, which takes 5 business days to process while handing a check to my landlord takes less than 1.
A few years ago, I was going through the process of changing my name. I was endorsing checks with my new name and depositing them into accounts with my old name -- a completely different name, and still no problems! I imagine this happens fairly often with newly-wed women.
Also, the signature on my current driver's license is a squiggly line.
This may be mostly true, or even universally true now, but it hasn't always been. I remember trying to make some major modification on an account with a local bank in Chicago around 2000 --maybe closing it?-- and the bank officer with whom I dealt actually brought out a physical record of my signature to compare against what I was currently signing. (Since I'd opened the account some years ago, it took me a long time to guess how I'd signed back then and to reproduce it successfully. For some reason, the officer was perfectly willing to let me try until I satisfied her, but not to accept that I was who my ID said I was.)
The ATM then tried to return the check to me, but there was some kind of paper feed error and I never saw it again.
The niche seems pretty small: payments too large for cash, too small for certified bank drafts, to people taking too few payments to have technologying up make sense.
The long answer is that you're risking being caught and charged with fraud.
What's interesting about this story is that it's not clear any fraud had taken place -- although I doubt the bank sees it that way.
Variations on this service give the customer access to a Web site with a daily exceptions report, or to a list of all checks for amounts greater than some threshold, from which the customer can instruct the bank to pay some checks and return others. The default is usually to return the check unpaid, since Article 4 of the Uniform Commercial Code gives banks a strong incentive to return any item they aren't going to pay before midnight on the next banking day after it was received.
These services used to be fairly expensive, but I see that some banks are now offering them for free or for a modest fee ($40 a month at Chase), perhaps because they shift some responsibility for fraud control to the customer.
1) You advertise an item of value X
2) Person 'buys' it. Sends you a cashiers check.
3) "whoops, they typoed the number and the cashiers check is for $1000 more than your car (or boat or whatever)" Go head and deposit it, take out the $1000 'extra' and send it back to me.
The check is forged, the fraud depends on banks giving legitimate customers access to 'some' of the funds right away and holding the rest until the check clears. The victim gives away the $1000, and their property, the crook rides off, and 3 days later the check bounces.
Going to jail for fraud is disincentive enough for most.
Checks can come back anywhere from nearly instantly (e.x if there's a bad routing number) to a day or two (insufficient funds, or bad accounts, or unauthorized on a commercial account) to a month or two (unauthorized on a personal account) to many months (fraud, US treasury checks). The last can be a real killer, since they're normally big checks on trustworthy accounts (though, not necessarily from trustworthy intermediates).
Checks are never really cleared, they just haven't bounced yet.
The transit, bank and account number on the check must all be fake (or I would hope that this get-rick-quick company didn't actually send their real bank information!). So whether or not the check has non-negotiable printed on it is a mute point. The check cannot be routed anywhere and would have been flagged immediately. This is not the good ol' days of bank fraud, ala Catch Me If You Can.
Does the fact that he knowingly deposited a fake check constitute fraud in the US?
He only got stubborn about it after 1) the bank far exceeded the deadlines for dishonoring the check, rendering the money legally his, and 2) when they tried to retrieve the money, they strongarmed him with security officers rather than approaching him as an adult.
What's missing from the FT version is that the initial freezing of all his accounts caused him some hardship and scared his mother, and once he spoke to the bank security officer about this and his original intent, and that he knew the law surrounding this, the bank backed off, unfroze his accounts, and started dealing with him with much more civility.
Maybe it was a case of "america's stupidest criminals." I don't know the details, but weirder things have happened.
Anyway, if this fake cheque had all the right details on it, or enough to make the transaction, how is it fake? Or how could it clear if the details were wrong? Surely US banks clear the cheque before crediting the account with the money?
Not according to snopes: http://www.snopes.com/business/bank/cowcheck.asp
It was close enough to being a real cheque aside from 'non-negotiable' and a whole host of other things on it to make it invalid, except the law prevented those things from mattering which turned it into a real cheque. Seems a bit fishy, but if the law says that it was a valid cheque, and it's been paid there's very little they can do except sue, which of course is how any big boy wins a fight these days.
I rang the bank (Santander in the UK - terrible bank don't use them) and they said "Oh yeah, we generally don't check the payer".
Really.
BadBob then calls and tells you to cash the cheque, send the goods when the cheque clears, and to just money transfer the excess when the cheque clears.
As this story shows a cheque clearing means almost nothing. The bank will discover the fraudulent cheque, normally a long time after you've sent the goods and the extra cash to BadBob, and they will take the money off you.
You are out the time; the goods; and the extra cash.
If you want to know what happens next, order our DVD now!
Remember that this story was written in 1995. Internet advertising was generally not available then, and neither was proper etiquette for advertising. I do not blame him for trying to partially monetize his thousands of hours of effort. After all, it's not like he kept the money.
We're talking about the article on FT.com (this actual submission) where there is nothing up front about it, and where, without finishing his story, he ends with the fact that he's telling the story live and how if you pay to see him you can find out the end of the story.
Most banks also have mobile applications for smartphones making money transfer even easier. I'm able to transfer money to people I've already sent money to, by just using an iPhone app, and a personal pin code. When I loose my phone, I can just block the app, just like what I'd do when I loose my plastic (credit) bank card.
In Holland we also use iDEAL [1], a nation-wide system for online shopping. It works a little bit like OAuth; I provide the webshop the bank I use, the webshop requests a money transfer, the bank creates a unique transaction, the webshop sends me to the bank, bank requests credentials and processes payment, and sends me back to the webshop proving details about the transaction. This system sounds much more secure to me than the credit card paradigm; only using a credit card number, an expiration date and a 'security code'.
I just don't understand why the USA is still using a method so susceptible to fraud.
FT Cookie Policy
We have published a new cookie policy. It explains what cookies are and how we
use them on our site. To learn more about cookies and their benefits, please
view our cookie policy.
If you'd like to disable cookies on this device, please view our information
pages on 'How to manage cookies'. Please be aware that parts of the site will
not function correctly if you disable cookies.
By closing this message, you consent to our use of cookies on this device in
accordance with our cookie policy unless you have disabled them.Anyway, the reason for it is an EU directive, find out about it from the UK government branch tasked with these things, the Information Commissioner's Office: http://www.ico.gov.uk/for_organisations/privacy_and_electron...
With the changes put in place after 9/11 and the Check 21 legislation float has diminished quite a bit but it still exists. Unfortunately there's just so much blue tape that banks are required to jump through that money that is fraudulently acquired takes some time to get back.
the reason this even happened is he was a good standing customer, and they did have his account information so of course they let him deposit it. it would be the responsibility of the bank that the check was drawn off of to catch the mistake. The man's bank just issues a credit to the bank that is drawn on.. it's when that bank catches the error they have to send off for a correction, this normally takes quite a bit of time.. we're talking 2-3 weeks especially in 1995.
the minute the man withdrew the cash their internal system red flags such a large withdrawal amount, this is why the bank was suddenly made aware of that transaction.
We have giro and SEPA transfers. If I want to transfer money to someone, I simply order my bank to withdraw said amount from my account and transfer it to the destination account. I could even do this without having a banking account. Anybody could walk to a post office or bank and pay into someone's bank account with cash on hand.
Printed on the bottom of the check is my account number and a routing number for my bank. They're printed in a format called MICR, which uses magnetic ink (or used to, not sure if they still do) so that computers can scan them quickly. When I worked at a grocery store in the 90s, our systems were supposed to actually verify whether or not a check was "good" by checking the amount against the amount available in their accounts. Not sure if this really worked, because I never saw a check get rejected.
It used to take several days for the whole thing to play out. What would happen is that, when the recipient deposited one of my checks, their bank would credit them the amount of the check immediately (there are some limitations on this depending on the size of the check; banks have various policies about that) and the check would enter the inter-bank system. A day or so later, the actual amount would be withdrawn from my account.
In most places, passing a bad check (called "bouncing") is a crime, though most banks will provide some type of overdraft protection (usually with an accompanying steep fee) to keep you from getting in trouble with the law.
Checks were widely used up until the early-mid 2000s, when debit cards started to become widespread. These days, they are primarily used by the elderly who refuse to adopt newer technology, in businesses that do not use direct deposit, and in complex financial situations (such as purchasing real estate). Other than that, the vast majority of purchases in America happen via the card networks.
I write maybe three checks a year and receive maybe two. Everything else is done online or by the card networks. And best of all, when I receive a check, my bank (USAA) lets me just take a picture of it with my iPhone and immediately credits me the amount, as a scan is considered a valid reproduction of the check.
That said, it's been so long since I last used my checkbook, the bank changed its name and my account number since it was printed. And yes, they are still valid.
Think about why this story is so noteworthy: because this sort of thing happens so rarely. The vast, vast majority of checks are written, sent, and cleared without fraud or incident.
Not sure how cheques work in the US, though - I think we don't have them anymore in Germany.
It is a common scam here to be asked to receive some payments on your bank account and pass them on. When the original owner discovers it, you are the culprit and not the scammer...
[1] Auctions for example, where the payment must be delivered immediately and cash would be impractical. Usually, in that case, a "Bundesbankscheck" is used which is as good as cash: http://de.wikipedia.org/wiki/Best%C3%A4tigter_Bundesbank-Sch...
Would some sort of penalty be applied to someone depositing such a check, assuming one received such a check and it does have all the necessary features?
It was a great and really animated show. I wish I'd just skimmed the FT article though as the first 10 mins were just going over that again!
This guy has been milking this story for quite some time.
Deleted comment