6 ms·

Exactly my point: banks should be responsible for doing the job they are paid for, processing transactions, and should not be liable for someone else's lack of

by Aspos 4y ago

Exactly my point: banks should be responsible for doing the job they are paid for, processing transactions, and should not be liable for someone else's lack of judgement. The fact that it is legal to make banks pay for such things does not mean it is just, moral or ethical.

mlyle 4y ago
We have a few hundred years of legal tradition around banking and commercial transactions, that have been carefully balanced in ways to give everyone involved an incentive to prevent fraud and to produce a system in which the amount of fraud is manageable. Externalizing all the risk out to the individual customers doesn't seem like a preferable system. Banks have done a whole lot of work to make the risks associated with this manageable and even profitable. Consumers are safer, and also it is more reasonable to trust the payment system to have safe outcomes. As a result it is used more, and banks make more money.
- Aspos 4y ago
  - mlyle 4y ago
    > US banks in average lose 2-4 orders of magnitude more to fraud than banks outside of the US. You think US banks lose 10000x as much to fraud as banks outside of the US? Card fraud in Germany is 0.02% of transaction value. Does that mean it's 200% of transaction value here? Most recent number I have for US is 6.81 cents per $100, or .07%. The regulatory regimes are not too different, between Europe and the US. Banks are legally incentivized to reduce fraud, but even so US banks have resisted anti-fraud measures because they add friction to transactions. Witness them being slow to deploy chips to credit cards and electing not to deploy chip-and-PIN in the US. P.S. I would avoid using the word "retarded", even misspelled.
    - Aspos 4y ago
      Correct, 10000x. Some anecdata: I used to work for a bank in Eastern Europe and we once lost a grand total of $6K to fraud one year with about ~1M cardholders. 10000x of that would be $60 per customer per year. Some neobanks here in the US lose more. The point is, all the fraud loses end up being paid for by other customers. So that guy changed his mind, filed a chargeback for a transaction he actually did authorize, and he and his laywer got paid by all other customers who did nothing wrong. And some folks who could have been happily banked ended up unbanked. You are right about your P.S
      - mlyle 4y ago
        > Correct, 10000x. Again, this doesn't seem reasonable-- it would indicate losses over 100%. https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudreport202110~cac4c418e8.en.html https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudre... Every indication is that Europe has about half the payment card fraud rate of the US-- mostly explained by lower rates of card-present fraud due to use of chip-and-PIN. I was surprised to see Eastern Europe have such a low rate of fraud from an issuing perspective, but it's still about half the European average. From the acquiring perspective, Eastern Europe is *ahem* well-represented in payment fraud. > So that guy changed his mind, filed a chargeback for a transaction he actually did authorize, That is not the facts or situation that the grandparent poster described.
        Aspos 4y ago
        You are looking at it from the wrong end, averages mask the issue. Consider this: Romanian state employees generate multiple X less fraud than average Romanians. Bank serving them may lose cents per customer per year and make, say, $50 per year. A neobank in the US engaged in predatory lending to gig workers may lose $60 per customer per year, but may make $200. If you compare similar segments and similar business models, the difference can be 2-4 orders of magnitude, depending on segment. That guy authorized crypto.com to access his bank account, crypto.com got hacked, and bank ended up paying him and his lawyer. What is not correct here? Who had to foot the bill in the end?
datavirtue 4y ago
Most banks are very loosey goosey. They shrug off his fees and will still go on doing it the same way.
biaachmonkie 4y ago
LOL. I just have to chuckle at trying to bring a moral or ethical argument in favor of banks, given their practices of maximizing of fees they charge to least able to afford them, how they reorder transactions to ensure people go over and they can then extract the most fees.

by Aspos 4y ago

mlyle 4y ago

We have a few hundred years of legal tradition around banking and commercial transactions, that have been carefully balanced in ways to give everyone involved an incentive to prevent fraud and to produce a system in which the amount of fraud is manageable. Externalizing all the risk out to the individual customers doesn't seem like a preferable system. Banks have done a whole lot of work to make the risks associated with this manageable and even profitable. Consumers are safer, and also it is more reasonable to trust the payment system to have safe outcomes. As a result it is used more, and banks make more money.

Aspos 4y ago
- mlyle 4y ago
  > US banks in average lose 2-4 orders of magnitude more to fraud than banks outside of the US. You think US banks lose 10000x as much to fraud as banks outside of the US? Card fraud in Germany is 0.02% of transaction value. Does that mean it's 200% of transaction value here? Most recent number I have for US is 6.81 cents per $100, or .07%. The regulatory regimes are not too different, between Europe and the US. Banks are legally incentivized to reduce fraud, but even so US banks have resisted anti-fraud measures because they add friction to transactions. Witness them being slow to deploy chips to credit cards and electing not to deploy chip-and-PIN in the US. P.S. I would avoid using the word "retarded", even misspelled.
  - Aspos 4y ago
    Correct, 10000x. Some anecdata: I used to work for a bank in Eastern Europe and we once lost a grand total of $6K to fraud one year with about ~1M cardholders. 10000x of that would be $60 per customer per year. Some neobanks here in the US lose more. The point is, all the fraud loses end up being paid for by other customers. So that guy changed his mind, filed a chargeback for a transaction he actually did authorize, and he and his laywer got paid by all other customers who did nothing wrong. And some folks who could have been happily banked ended up unbanked. You are right about your P.S
    - mlyle 4y ago
      > Correct, 10000x. Again, this doesn't seem reasonable-- it would indicate losses over 100%. https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudreport202110~cac4c418e8.en.html https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudre... Every indication is that Europe has about half the payment card fraud rate of the US-- mostly explained by lower rates of card-present fraud due to use of chip-and-PIN. I was surprised to see Eastern Europe have such a low rate of fraud from an issuing perspective, but it's still about half the European average. From the acquiring perspective, Eastern Europe is *ahem* well-represented in payment fraud. > So that guy changed his mind, filed a chargeback for a transaction he actually did authorize, That is not the facts or situation that the grandparent poster described.
      - Aspos 4y ago
        You are looking at it from the wrong end, averages mask the issue. Consider this: Romanian state employees generate multiple X less fraud than average Romanians. Bank serving them may lose cents per customer per year and make, say, $50 per year. A neobank in the US engaged in predatory lending to gig workers may lose $60 per customer per year, but may make $200. If you compare similar segments and similar business models, the difference can be 2-4 orders of magnitude, depending on segment. That guy authorized crypto.com to access his bank account, crypto.com got hacked, and bank ended up paying him and his lawyer. What is not correct here? Who had to foot the bill in the end?

datavirtue 4y ago

Most banks are very loosey goosey. They shrug off his fees and will still go on doing it the same way.

biaachmonkie 4y ago

LOL. I just have to chuckle at trying to bring a moral or ethical argument in favor of banks, given their practices of maximizing of fees they charge to least able to afford them, how they reorder transactions to ensure people go over and they can then extract the most fees.