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In the United States, money transmission is a regulated space. I.e. you must meet a minimum set of regulations in order to hold that license. That license requi

In the United States, money transmission is a regulated space. I.e. you must meet a minimum set of regulations in order to hold that license. That license requires you be able to do things like handle fraud, chargebacks, dispute resolution, etc... Everyone implements these processes, and if you get a money transmitter that doesn't, generally, every other money transmitter in the space will mark transactions from that actor as high-risk, either rejecting tx's from them, or sibjecting them to longer holds, or just straight out rejecting them. If you don't have a license of your own, your on ramp is through someone who does. They can underwrite the risk of your membership in the financial system as a whole, but if they find out (and they will, because their business contracts come with audit, FWA, and due diligence clauses) you will find your access cut off, and if it's brazen enough, lawsuits getting served. Now, what does this mean? If you hand someone a blank check, they can absolutely take you the cleaners. However, if someone crafts a malicious ACH payload, the origin of that can be traced from your bank, back to the clearinghouse, from the clearinghouse, back to the originator, who will have their processes scrutinized/investigated. Generally Accepted Accounting Principles and double-entry accounting is the magic glue that ties everything together. If you follow the rules, you will have a transparent trail to follow. If you don't, you've entered suspected money laundering land. As a customer... If you're deposited somewhere that is FDIC insured... You're golden up to $100,000ish. If they aren't FDIC insured, if there's a dispute department, you should be good. You should still treat it as higher risk though in that if they get bank run'd, they do not guarantee at all you can get any money back. These are regulatorally speaking, not banks. They can take deposits, do transactions, dispense/administer interst bearing accounts (and do often pay higher interest due to the higher risk involved with depositing funds there), and do bank like things, but they are not banks. If you can't get in contact with a human being, good luck, and godspeed. You are braver than I.

mousetree 4y ago
FDIC Insurance has nothing to do with ACH fraud - it covers cases where the bank itself fails. NACHA has its own process for ACH disputes/reversals/returns. Not sure what GAAP and double entry accounting has to do with this. The fraud here is not from end users "crafting a malicious ACH payload". End users don't interact with NACHA in that way. The more common case is when users, via their bank, are doing ACH Pulls from accounts that they shouldn't be. Most banks that offer direct ACH Pulls to their customers use a third party like Plaid Identity or microdeposits to prove ownership of an external account prior to initiating the ACH Pull. This is not 100% effective always - disclosure: I work at a neobank and I am directly involved in building systems to prevent/mitigate ACH fraud.

mousetree 4y ago

FDIC Insurance has nothing to do with ACH fraud - it covers cases where the bank itself fails. NACHA has its own process for ACH disputes/reversals/returns. Not sure what GAAP and double entry accounting has to do with this. The fraud here is not from end users "crafting a malicious ACH payload". End users don't interact with NACHA in that way. The more common case is when users, via their bank, are doing ACH Pulls from accounts that they shouldn't be. Most banks that offer direct ACH Pulls to their customers use a third party like Plaid Identity or microdeposits to prove ownership of an external account prior to initiating the ACH Pull. This is not 100% effective always - disclosure: I work at a neobank and I am directly involved in building systems to prevent/mitigate ACH fraud.