JPMorgan Begins Suing Customers In 'Infinite Money Glitch' (cnbc.com) 218
JPMorgan Chase is suing customers who exploited an ATM glitch that allowed them to withdraw funds before a check bounced. CNBC reports: The bank on Monday filed lawsuits in at least three federal courts, taking aim at some of the people who withdrew the highest amounts in the so-called infinite money glitch that went viral on TikTok and other social media platforms in late August. [...] JPMorgan, the biggest U.S. bank by assets, is investigating thousands of possible cases related to the "infinite money glitch," though it hasn't disclosed the scope of associated losses. Despite the waning use of paper checks as digital forms of payment gain popularity, they're still a major avenue for fraud, resulting in $26.6 billion in losses globally last year, according to Nasdaq's Global Financial Crime Report.
The infinite money glitch episode highlights the risk that social media can amplify vulnerabilities discovered at a financial institution. Videos began circulating in late August showing people celebrating the withdrawal of wads of cash from Chase ATMs shortly after bad checks were deposited. Normally, banks only make available a fraction of the value of a check until it clears, which takes several days. JPMorgan says it closed the loophole a few days after it was discovered.
The lawsuits are likely to be just the start of a wave of litigation meant to force customers to repay their debts and signal broadly that the bank won't tolerate fraud, according to the people familiar. JPMorgan prioritized cases with large dollar amounts and indications of possible ties to criminal groups, they said. The civil cases are separate from potential criminal investigations; JPMorgan says it has also referred cases to law enforcement officials across the country. "Fraud is a crime that impacts everyone and undermines trust in the banking system," JPMorgan spokesman Drew Pusateri said in a statement to CNBC. "We're pursuing these cases and actively cooperating with law enforcement to make sure if someone is committing fraud against Chase and its customers, they're held accountable."
The infinite money glitch episode highlights the risk that social media can amplify vulnerabilities discovered at a financial institution. Videos began circulating in late August showing people celebrating the withdrawal of wads of cash from Chase ATMs shortly after bad checks were deposited. Normally, banks only make available a fraction of the value of a check until it clears, which takes several days. JPMorgan says it closed the loophole a few days after it was discovered.
The lawsuits are likely to be just the start of a wave of litigation meant to force customers to repay their debts and signal broadly that the bank won't tolerate fraud, according to the people familiar. JPMorgan prioritized cases with large dollar amounts and indications of possible ties to criminal groups, they said. The civil cases are separate from potential criminal investigations; JPMorgan says it has also referred cases to law enforcement officials across the country. "Fraud is a crime that impacts everyone and undermines trust in the banking system," JPMorgan spokesman Drew Pusateri said in a statement to CNBC. "We're pursuing these cases and actively cooperating with law enforcement to make sure if someone is committing fraud against Chase and its customers, they're held accountable."
how much (Score:2)
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According to the Article, it looks like it was a guy in Houston who got a bit under $291,000.
Not sure how much luck JPMorgan is going to have in the lawsuit department -- people who do this sort of thing aren't exactly the sort of people who are likely to just invest the money. Chances are it's mostly gone.
Americans say what? (Score:2, Interesting)
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Your country also has its share of idiots, every country does.
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Problem is that he's right. It went viral on black tiktok as something to do, and then it went viral on general tiktok where smarter blacks were laughing their asses off filming the "dumb n*ggers" in queues and mocking them mercilessly, while dumber ones were lamenting they didn't have accounts there or that they had to get to work so they couldn't queue up for "free money". And one look at videos of queues will tell you that they were right and everyone in those long queues had the same skin color.
Because
Re: Americans say what? (Score:2)
I've yet to see a video of anyone doing this that wasn't a fake.
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A fake in what sense? The queues were real. The outcomes of the queues are also real, as mentioned in this story.
"Fraud is a crime" (Score:5, Insightful)
"Fraud is a crime", unless it is perpetrated by the banks, then it is just business as usual.
P.S. that it still takes days to clear a check is borderline criminally negligent with modern day technologies. How hard is it to scan a check and send it to the issuing bank to clear? 24 hours is more than adequate for the whole process.
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It took an hour of phone calls at my bank for them to clear my California income tax refund check.
They didn't have anything like it in their huge database of checks.
I must be one of the only people to ever manage to get a refund from California. :-)
Re: "Fraud is a crime" (Score:2)
No just the only one to get a paper check.
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"Don't look at the criminals, look at banks being inefficient, it's totally the same".
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About 3-10 seconds sounds more like it. At least that is my experience in the UK with bank transfers.
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"Fraud is a crime", unless it is perpetrated by the banks, then it is just business as usual.
P.S. that it still takes days to clear a check is borderline criminally negligent with modern day technologies. How hard is it to scan a check and send it to the issuing bank to clear? 24 hours is more than adequate for the whole process.
Probably on the list of things to automate and use AI for.
They score the deposit for signs of fraud. (Large account with a high credit score and assets on deposit, likes stocks and bonds low risk. New account with minimal assets, higher risk. personal check vs payroll check, higher risk) and then tend to release a percentage of the check based on the risk score. They use the same to determine how much they will let you deposit via a mobile app.
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These stupid amateur fraudsters got nothin' on JPMorgan!
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It goes back to the days of mainframes and batch processing. Mainframes are still involved but why your transaction has to sit in a queue for a day is an excellent question.
Re:"Fraud is a crime" (Score:4, Interesting)
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P.S. that it still takes days to clear a check is borderline criminally negligent with modern day technologies.
Timing requirements for clearing bank transactions are set by the federal reserve in 31 CFR Part 210. They've allowed same-day check clearing since 2018, but the rollout has been slow for various 2019-related reasons. The entire system is still designed around the concept of shipping trucks of 9-track tapes to the clearinghouse and resolving everything overnight. The federal reserve can change how it works whenever it wants, but it would involve changing how every bank in the country does ACH, and there are
Not a glitch. Outright fraud. (Score:5, Informative)
It was not a glitch. The bank allowed you to deposit a check, and then to immediately draw on that check as a sign of good faith on the validity of said check. If the check was bad, though, you're on the hook for that money. No different than if you went to a teller and did the same thing, except that there was no human contact.
To think this was a glitch is to reveal one's own gullibility.
I would fully expect the account to have been debited once the bad check was discovered, and a penalty applied on top of that, according to the rules of the account. I would also expect the largest abusers to have been malicious, rather than merely opportunistic, for whom legal remedy is justified. Everyone else got to pay a fee to learn a lesson about writing checks.
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I assume these cases are about getting a judgement on accounts that are now negative.
I know if my bank account was 5 or 6 figures negative I'm not about to put money into it.
I'd be more surprised if they didn't try to recover the money.
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I'm amazed that the banks are not siccing their lawyers and pushing DAs to push check fraud charges on all these people. Writing hot checks is a crime, and has been for a long time.
To boot, consider the stupidity of things. One's own accounts, on a camera depositing a check in their own handwriting, at the ATM getting the cash. This is pretty much an open-and-shut case for the DA, and almost guaranteed to land a conviction. There is a reason why bank buildings and courtroom buildings have the similar Gr
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Sure. Tiktok trend being referenced. You can find videos of those queues with a simple internet search. It will have that pattern present, both visible on camera as its being filmed and being mocked by the person belonging to that very group who's filming it.
Arbitration (Score:3, Interesting)
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Strong likelihood that their first step was to request repayment/restitution from the withdrawer (as agreed to in their customer agreement). Even if the withdrawal was malicious, assuming the customer had not spent the money, restitution could have been satisfied by returning the monies so obtained. Now whether you would call that "arbitration", I do not know, but certainly from a banking perspective, hiring lawyers is not a cost free exercise and typically not pursued by a bank without first attempting mor
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Problem here is that depositing a fraudulent check is an actual crime and not merely a civil dispute.
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Agreed, but I suspect it would fall under the "venal" category, i.e. pay it back, we will close your account and we won't press charges, if not, look at proceeding with civil/criminal charges (although in the case of criminal charges, the bank will have very little to say about that at the end of the day -- if the DA decides not to charge -- then that crime will not be charged).
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Large national banks have direct access to federal authorities, and as bad as police do in prisons, DAs do worse.
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While I agree that federal DA's tend to be more strict in adherence to the law (compared to some localities at least) -- but if one is dealing with many smaller prosecutions (i.e. perhaps less then $1,000?, $2,500?), I suspect them to not associate much DA time to move those prosecutions forward.
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They're being pretty nice about it. The alternative is to file criminal charges and ask the court to extract the money from them (after they get out of prison in about 5 years).
Maybe they shouldn't defraud a huge bank and post videos of it online?
What exactly do you think should be arbitrated? There is no issue to be negotiated other than a repayment schedule and the avoidance of criminal charges if they stick to the schedule. That's exactly what happened to a college buddy of mine who stole from his emp
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What exactly do you think should be arbitrated?
The dispute.
If customer agreement says that both parties must use binding arbitration to settle any disputes, then that's how it needs to be settled.
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What is the nature of the dispute?
They over drew their account. Is that disputed?
They need to bring their account back to zero. Is that disputed?
What is in dispute? If there is no dispute (there is not) the only thing the arbitrator can and will do is tell the customer to repay.
Arbitration is not some magical place where they ignore the law and common sense. Most arbitrators are retired judges and lawyers. They ren't random people off the street who will declare some bizarre outcome like no repayment i
Re: Arbitration (Score:2)
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Is the claim really that criminal offenses are also blocked by arbitration agreements?
Because that's just patently false.
Reminder: intentionally using bad checks to acquire cash is fraud. Which is a crime, not a civil dispute.
Re: Arbitration (Score:2)
You can't sue someone in criminal court. These lawsuits are absolutely civil matters.
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This is a distinction without meaning for purposes of this argument. You can press criminal charges, which leads to district attorney to sue on your behalf in a criminal court. Whereas in civil court you hire an attorney of your own to sue on your behalf.
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This is a distinction without meaning for purposes of this argument. You can press criminal charges, which leads to district attorney to sue on your behalf in a criminal court. Whereas in civil court you hire an attorney of your own to sue on your behalf.
In the United States you cannot press criminal charges unless you are a District Attorney. The District Attorney can ask if you want to press charges, but they can decide that even if you won't cooperate that they think they can get a conviction and file charges anyways. Additionally, you can go down and ask to press charges and they can say, ya sure whatever and blow you off.
I'm not an attorney, but I'd guess that the correct response is probably to file a demure to the civil suits citing the arbitration c
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That's a lot of irrelevant red herrings to avoid saying "yes you are correct on the meat of the subject".
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What is the nature of the dispute?
They over drew their account. Is that disputed?
They need to bring their account back to zero. Is that disputed?
I don't know. You don't know.
Unless the customer admits all wrongdoing up front, there is a dispute. If there is a dispute, it needs to go into arbitration.
The bank doesn't get to jump straight to federal court, any more than a customer could directly sue the bank in court if they thought it fraudulently mishandled their deposits and lost their money.
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There is no dispute. The customer wrote bad checks and then turned around to withdraw cash they knew was going to bounce.
They are very lucky the bank only sued them instead of going to the cops to have their dumb asses arrested for fraud.
Anything else on this topic is hair splicing OCD irrelevant bullshit.
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The customer wrote bad checks
That has yet to be proven in court or in arbitration.
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Anything else on this topic is hair splicing OCD irrelevant bullshit.
That is like 90% of legal cases though...
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The actual nature of dispute is fraud. Everyone involved deposited a fraudulent check to withdraw money. Intentionally, because they were following the trend. Because they were either too stupid to understand that ATM is not a magic money machine, or malicious and thought they could get away with it because of how many others were doing it at the same time.
I'm guessing criminal charges are going to be used as leverage to get people to pay back the money in this case, considering how many people were involve
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A dispute could be as to if they were the perpetrators of the fraud or victims of fraud.
Based on the checks being deposited they probably have a pretty strong suspicion of which one it is, but probably should go through arbitration..
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There is exactly zero dispute on who perpetrated the fraud. These people used their own bank accounts, had to input personally identifying information into ATM to access their accounts, and ATMs generally have cameras filming every transactor. As they committed fraud.
This is why this only worked on the dumbest portion of population. To everyone else, committing this sort of fraud was beyond obvious to have extreme consequences.
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They're being pretty nice about it. The alternative is to file criminal charges and ask the court to extract the money from them (after they get out of prison in about 5 years).
I wonder if the government would do that for you if you ever had a dispute with a large bank?
My guess is that criminal court is only for the riff-raff ie. you. The banks can defraud millions of people hundreds of millions of dollars and never ever have to worry about being locked in a cage.
Maybe Americans are just adapting to the behavior they see.
I can see a politically ambitious DA being willing to file on behalf of the customer. Joseph Liberman sued the grocery stores over mispricing things and the settlement was that the stores would double the value of coupons. Kamala Harris sued banks that foreclosed on deployed active-duty service members in violation of federal law. I'm sure it happens more than the two times I can think of off the top of my head.
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Are you ESL, super OCD or just an AC troll?
If the bank goes to the DA, charges will be filed. But you knew that, AC troll.
Correcting you so others won't get confused by your lies.
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Shouldn't they have to go through arbitration
No. Arbitration makes no sense. It is clear these people need to pay back the money, so there is nothing to arbitrate.
Only a court order is enforceable to seize assets, garnish wages, or whatever.
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Why is the bank entitled to obtain a court order, but customers aren't?
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Why is the bank entitled to obtain a court order, but customers aren't?
Because if the arbitrator says the bank has to pay, the bank will pay, so no court order is needed.
If the bank refuses to honor the arbitrator's ruling, the customer can go to court.
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The article said the bank tried to contact the customers, then sued them if they didn't respond. They did not indicate that they tried arbitration.
Again, why does the bank get to skip binding arbitration?
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Did the customer respond saying they disputed it?
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Again, why does the bank get to skip binding arbitration?
Arbitration is generally "loser pays".
There is no rational reason that any customer can dispute that they withdrew the money and must pay it back.
Going to arbitration will just add an extra $500 onto what they owe for the five minutes it takes for the arbitrator to tell them to pay up.
Then, if they fail to pay, they end up in court anyway, but with a bigger liability.
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Nevertheless, the agreement says it goes to arbitration. Why was that not done first?
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The article said the bank tried to contact the customers, then sued them if they didn't respond. They did not indicate that they tried arbitration.
Again, why does the bank get to skip binding arbitration?
I'm guessing that the defendant could demand binding arbitration and the court would grant it. I don't actually see how this helps the defendant though. Unless you can come up with arbitrators that would be in favor of customers and not the banks.
I could see organized crime being able to use this to their advantage, but not the average defendant with no connections to indirectly influence the arbitrators. In general, the arbitrators favor the banks because the banks will try not to use them again if they
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Isn't the here about depositing a fraudulent check into a machine and then immediately withdrawing the money before it's checked, which is criminal fraud?
Surely customer agreements do not supersede criminal law? Or is the claim that bank can seriously demand you hand over your first born, because they do?
Checks? (Score:2)
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We use signatures as a security solution for vote by mail in more than a few states, 31 according to this PolitiFact article: https://www.politifact.com/fac... [politifact.com]
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High trust society meets low trust society moment.
Some Checks are Important (Score:2)
But that pinnacle of business evolution country and Fortune 500 company still has checks?
The problem was that they got rid of too many checks. If they had only kept the check to make sure people had the money in their account before letting them withdraw it none of this would have happened.
TikTok clowns (Score:5, Funny)
"Hi everyone, watch me commit fraud, theft, and god only knows many other felonies in my public video!"
Anything for likes.
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A lot of the trend was people who were neither stupid nor opportunistic enough to ride it mocking and laughing at people standing in queues to commit fraud.
In related news ... (Score:5, Insightful)
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Oh, the irony (Score:2, Interesting)
""Fraud is a crime that impacts everyone and undermines trust in the banking system" which at JP Morgan know from our vast experience in perpetrating even worse crimes
E.g. just one of many
"In September 2020, JPMorgan admitted to committing wire fraud in connection with: (1) unlawful trading in the markets for precious metals futures contracts; and (2) unlawful trading in the markets for U.S. Treasury futures contracts and in the secondary (cash) market for U.S. Treasury notes and bonds. JPMorgan entered int
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Seems to match the current case, where bank suggests that it will not press criminal charges if you enter an agreement with it to refund the money you defrauded in this current case.
So this is "rules for thee and for me".
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So this is "rules for thee and for me".
Really. Isn't this the same bank that got all that delicious bailout funding from the taxpayer not so long ago?
USD 25 Billion paid out in 2008 to these criminal farkwits to get them out of a hole they dug for themselves.
Let's stop pretending the same rules are being applied equally.
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Try to reach beyond emotional rejection. Reason often lies beyond that state. And it's worth reaching for.
Third world doing better? (Score:2)
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In this case, bank in question was a high trust society bank and its machines assumed that you wouldn't put in fraudulent checks under your own name and withdraw money while having an actual account with the same bank so all your information is readily available for criminal charges.
It didn't account for low trust society behavior like not caring about any of that and living in the euphoria of the "I got free money for a few hours" moment.
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So essentially people not understanding that actions have consequences and not understanding how a bank works?
Re: Third world doing better? (Score:3)
It varies wildly, depending on the bank. It's not a technical issue, it's a trust issue.
For example, were you to write me a check from your Indian bank, no American bank would trust it, and so there would be a significant wait. But if you submitted an electronic check from a different account at the same bank, it would likely clear nearly instantaneously.
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Same here but the banks are able to speak to each other and actually make sure the money is there within 6 hours between any banks/branches within the country
Sort of. But, they don't know how many other checks have been written.
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Solved problem: The money gets reserved provisionally.
Check your checks (Score:2)
Is there any benefit at all of using checks instead of bank transfers? Europe has bank transfers EU-wide that work within ten seconds. Why are checks even needed? The amount of people and companies getting defrauded with some check scam is ludicrous.
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>Europe has bank transfers EU-wide that work within ten seconds.
They actually don't. SEPA demand is usually met with a simple check of "do you have balance" followed by a reservation. Actual money is moved much later.
And the reason that most of the private use of it is through third party services is because few want to give strangers they're doing business with their bank account details. Third party services basically function as an anonymization layer between your account number and the transaction, s
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They actually don't
"Instant payment regulation" https://eur-lex.europa.eu/lega... [europa.eu]
5a.4(c) "the payee’s PSP shall, within 10 seconds of the time of receipt of the payment order for an instant credit transfer by the payer’s PSP, make the amount of the payment transaction available"
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Excellent, you understand how to look up legislation.
Now look up what "credit" means in this context, and you'll understand why my statement above is correct, while yours is false. Credit issuance is not a bank transfer.
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To expand on my other reply, it has occurred to me that since you don't understand what credit means in this instance, you probably also don't understand what "make it available" means either.
In this case, what actually happens is that bank transfer (clearing of funds) still takes up to a day. What actually happens is essentially a debit payment. Payment receiver's bank informs the payer's bank that it needs to reserve x amount of funds are available on target account. Bank checks and replies that funds are
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They actually don't. SEPA demand is usually met with a simple check of "do you have balance" followed by a reservation. Actual money is moved much later.
That's an implementation detail, from a customer perspective it's the same thing.
And the reason that most of the private use of it is through third party services is because few want to give strangers they're doing business with their bank account details. Third party services basically function as an anonymization layer between your account number and the transaction, so all the other party gets to see is the details of the third party plus some identifying feature of you, such as your phone number.
What bank account details? Their bank account number? You literally cannot do anything with that info? The name you write on a check you can do a lot more with.
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>That's an implementation detail, from a customer perspective it's the same thing.
Considering that SEPA is primarily intended as enabler of interpersonal transfers, there's no "customer" involved on either side, so you fundamentally misunderstand what SEPA even is and what it was intended for.
>What bank account details? Their bank account number? You literally cannot do anything with that info? The name you write on a check you can do a lot more with.
I see you haven't been following debates on SEPA an
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Considering that SEPA is primarily intended as enabler of interpersonal transfers, there's no "customer" involved on either side, so you fundamentally misunderstand what SEPA even is and what it was intended for.
There is no customer of a bank? Are you kidding me?
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That one is on you. Now that you qualify it with "of a bank", the context is completely different from plain "customer", which in a discussion about tank transactions would normally be associated with parties to the transaction.
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I see you haven't been following debates on SEPA and why it was necessary. They had spreadsheets with research on what information people were willing to give in interpersonal payment events, and bank account number was pretty close to the top of "I will not give this to a stranger no matter what" table.
Ok show me the spreadsheet. Separately, how do you explain that personal checks basically are extinct in most of Europe?
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I don't have it. Debates were what, a half a decade ago?
Can you name me a country where it's normal to provide strangers with your bank account number? I'm actually one of the few people who will do it within my circle, and I'm considered "weird" for it. Since everyone else just pays mobilepay which is a Danske Bank SEPA frontend that substitutes your Finnish bank account number with your phone number for payments between two parties within their app.
The reason why personal checks aren't used in most of Eur
Re: Check your checks (Score:2)
No electricity or network access required for checks. That's the primary benefit, anyway. Everything can be done with paper and ink only.
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Are there many areas in the US without access to electricity or phone/data where you must make money transfers and cash isn't an option?
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In 2024 the only method of paying my local school taxes is via check. I suppose they might accept a money order but have never attempted it.
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25+ years ago you could pay for your petrol with a cheque in the UK.
20+ years ago, that stopped, because of rampant fraud.
25+ years ago I was paid by all my clients by cheque.
That stopped 15-20 years ago.
25+ years ago, my bank automatically send me a cheque book with any new account.
20+ years ago, that stopped.
I don't think that, in the meantime, I've ever used a cheque. Never cashed one, never written one, don't even have the capability on my online-only accounts nowadays.
They're a legacy nonsense, like p
What was the bug, exactly? (Score:2)
Think about this for a second.
Arenâ(TM)t there just two different check writing cases?
The first case is that you deposit a check written from an account that is not yours to an account that is yours.
The second case is that you write a check written from your account to another personâ(TM)s account.
So clearly there is no check writing case where a person writes a check to themselves, is there? And if not, then were all of these situations where people were depositing checks that were written by oth
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Think about this for a second. Arenâ(TM)t there just two different check writing cases?
The first case is that you deposit a check written from an account that is not yours to an account that is yours.
The second case is that you write a check written from your account to another personâ(TM)s account.
So clearly there is no check writing case where a person writes a check to themselves, is there? And if not, then were all of these situations where people were depositing checks that were written by others, then immediately withdrawing cash from their own account? If the funds existed in the originating account, this isnâ(TM)t exactly a problem.
If so, then where would the funds have come from? Who is actually writing the check? What this means to me is that in every case where this occurred, there would need to be an accomplice, and a pretty stupid accomplice at that. The accomplice would have to knowingly be writing a âoebad checkâ because if the check wasnâ(TM)t bad, there would be no crime.
Or was the actual bug that the ATMs were allowing a third check usage case, one where a person could cash a check written to themselves? That seems too ludicrous to be true.
Some of us have more than one account at more than one bank and do occasionally write checks to ourselves to move money between accounts.
JPM Chase being self-righteous is quite rich. (Score:2)
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Your seeming memory is incorrect. Yes, the Fed did provide money to JPMorgan in 2008 to rescue Bear Stearns, which was collapsing. https://en.wikipedia.org/wiki/... [wikipedia.org] JPMorgan itself was not in trouble. The purpose of the money was to keep the entire financial system from collapsing.
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No, it's much more pragmatic than that. Had the Fed not sweetened the deal, JPMorgan would have simply declined to buy Bear Stearns. They judged it a money-losing deal. The Fed didn't want Bear Stearns to fail, for fear of what it would do to the overall financial system. To sweeten the deal, they provided money and guarantees to entice JPMorgan to buy Stearns.
Whether or not you agree with salvaging Bear Stearns, the money was *not* to prop up a failing JPMorgan, JPMorgan was never in danger of failing. The
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Conspiracy theories about "the government" or "rich people" have no credibility. Real conspiracies have specifics--specific people, specific goals. The fact is, the owners of Bear Sterns took a bloodbath, they lost 70% of their holdings. It's not clear that *anyone* "won" in the Bear Stearns bailout. https://www.investopedia.com/t... [investopedia.com]
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My guess would be simple adversity to change and lack of regulation regarding ineroperability.