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How do you handle ACH clawbacks? What your business models needs to protect against is... hackers steal a victim's private information enough to be able to sub

How do you handle ACH clawbacks? What your business models needs to protect against is... hackers steal a victim's private information enough to be able to submit the ACH to you. The victim reports it to their bank several days after the theft. The bank does an ACH clawback from your banking partner. Where is your time gap to get past ACH clawbacks?

tg3 7y ago
We have guards in place to protect against fraud by verifying your identity in a few different ways, but this is something we'll monitor and make improvements to over time. It's critical to the survival of the business that we have strong fraud detection methods. However, we also think that the experience of instant transfers is valuable, so on a risk-based approach we allow instant transfers using ACH for certain customers and certain transaction sizes.
- notyourday 7y ago
  > However, we also think that the experience of instant transfers is valuable, so on a risk-based approach we allow instant transfers using ACH for certain customers and certain transaction sizes. You have a fundamental misunderstanding how ACHs work. There's no such thing as an ACH that is "completed". At +180 days the state is "It is probably going to be fine". At +365 days the state is "It is probably most likely going to be fine" etc. Source: Done consulting for execs at medium sized banks.
  - tg3 7y ago
    You're right that ACH reversals can come far after the payment appears to be settled. Based on the customer and transaction size, we treat the ACH as "completed" (i.e. available to buy Bitcoin with) at different points in its lifecycle.
  - jstanley 7y ago
    You might have a fundamental misunderstanding of their business model. They don't need to classify an ACH as "completed" or "not completed", they only need to place a confidence interval on its completion state, which becomes easier as they process more transfers.
    - notyourday 7y ago
      > They don't need to classify an ACH as "completed" or "not completed", they only need to place a confidence interval on its completion state, which becomes easier as they process more transfers They ignore financial regulations to the level of Uber ignoring taxi regulations. The difference between the taxi commission or whatever its name is in San Fran and US Department of Treasury is that the later relies on people with guns and can block customer's ability to do any financial transactions. The reason why in the standard custodial scheme ACH transactions are fine ( but still are frowned upon ) is because the appreciating asset can be reclaimed from a custodian via courts.
  - wmf 7y ago
    All legit exchanges (e.g. Coinbase and Gemini) have this problem but there's really no better way for consumers to transfer USD.
    - notyourday 7y ago
      Non-transactional nature of ACH are a feature, not a bug. The legit exchanges account for it using in house compliance departments, risk management groups and people intimately familiar with the cash management side of the finance industry.

tg3 7y ago

We have guards in place to protect against fraud by verifying your identity in a few different ways, but this is something we'll monitor and make improvements to over time. It's critical to the survival of the business that we have strong fraud detection methods. However, we also think that the experience of instant transfers is valuable, so on a risk-based approach we allow instant transfers using ACH for certain customers and certain transaction sizes.

notyourday 7y ago
> However, we also think that the experience of instant transfers is valuable, so on a risk-based approach we allow instant transfers using ACH for certain customers and certain transaction sizes. You have a fundamental misunderstanding how ACHs work. There's no such thing as an ACH that is "completed". At +180 days the state is "It is probably going to be fine". At +365 days the state is "It is probably most likely going to be fine" etc. Source: Done consulting for execs at medium sized banks.
- tg3 7y ago
  You're right that ACH reversals can come far after the payment appears to be settled. Based on the customer and transaction size, we treat the ACH as "completed" (i.e. available to buy Bitcoin with) at different points in its lifecycle.
- jstanley 7y ago
  You might have a fundamental misunderstanding of their business model. They don't need to classify an ACH as "completed" or "not completed", they only need to place a confidence interval on its completion state, which becomes easier as they process more transfers.
  - notyourday 7y ago
    > They don't need to classify an ACH as "completed" or "not completed", they only need to place a confidence interval on its completion state, which becomes easier as they process more transfers They ignore financial regulations to the level of Uber ignoring taxi regulations. The difference between the taxi commission or whatever its name is in San Fran and US Department of Treasury is that the later relies on people with guns and can block customer's ability to do any financial transactions. The reason why in the standard custodial scheme ACH transactions are fine ( but still are frowned upon ) is because the appreciating asset can be reclaimed from a custodian via courts.
- wmf 7y ago
  All legit exchanges (e.g. Coinbase and Gemini) have this problem but there's really no better way for consumers to transfer USD.
  - notyourday 7y ago
    Non-transactional nature of ACH are a feature, not a bug. The legit exchanges account for it using in house compliance departments, risk management groups and people intimately familiar with the cash management side of the finance industry.