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This system seems ripe for exploitation. Banks 'clear' checks by granting the account holder access to the funds they expect to be available. A check can still
by dkokelley 15y ago
This system seems ripe for exploitation. Banks 'clear' checks by granting the account holder access to the funds they expect to be available. A check can still be bounced or returned days or even weeks later in the case of fraud.
This is how a very common scam works. Receive a check written for more than you were expecting (usually for the sale of some goods or as prepayment for a service). Receive instructions to deposit the check and return the difference to them (with a healthy profit for your troubles). Weeks later, the check bounces and your account is debited the amount of the check, while the scammer has the cash you wired to them. Essentially, the scammer uses your good standing with the bank to cash a bad check.
Given the nature of this system, what's to stop someone from depositing a bad check, emailing the receipt, and receiving BTC after the funds are released but before the check actually clears (or rather, bounces)?
- tedunangst 15y agoIt's a social experiment. After someone deposits a bad check and blogs about it, we'll call them nasty names, then it won't happen again.
- dkokelley 15y agoWhat do you mean by "it won't happen again"? I don't think calling someone nasty names will prevent a fraudster from trying to exploit this system. If anything, I think the system would shut down to prevent any more abuse.
- westicle 15y agoGrandparent comment is a tongue-in-cheek reference to the recent "Jonathon's Card" incident which was extensively discussed on HN. I don't think you should take it at face value. In fact, I don't think it belongs in this thread at all as it adds nothing to the discussion.
- javert 15y agoYou have it backwards. When someone deposits a bad check it's bad for ExchB. Makes it easy to steal from them. So the question is, how is this a viable business model for them? (I don't know the answer, would be interested to hear it..)
- starwed 15y agoThe scam and your idea seem fundamentally different. I'm not sure exactly how this ExchB thing works, but since your exploit involves personally writing a bad check, and then cashing it at a bank... seems like you would end up being liable.
- hippich 15y agoWho said scammer will be using his own checking account to write checks?
- starwed 15y agoOk, I obviously don't understand how this is an exploit of this particular system. It just sounds like a plan to pay for things with fraudulent checks, which folk have been doing forever.
- tedunangst 15y agoPeople have been writing bad checks forever, which is why there are safeguards such as withdrawal delays. ExhB is turning off the safeguards.
- dkokelley 15y agoThe scam and my idea ARE different, but the same principle allows both to be accomplished. Funds are made available from checks well before money is collected. To someone unaware of the system, they might assume the check was good because the money was cleared into their account. This is what would trick ExchB into granting you BTC without the guarantee that they were paid.