7 ms·

As far as I know, there are just 2 things preventing fraudulent checks: 1. Obscurity : Someone has to know your account number and routing code. 2. ... Ah, m

by sudonim 14y ago

As far as I know, there are just 2 things preventing fraudulent checks: 1. Obscurity : Someone has to know your account number and routing code. 2. ... Ah, make that just one thing preventing fraudulent checks. It's scary. Any legitimate check, for any amount contains enough information to create a fraudulent check to drain a bank account.

knowtheory 14y ago
Actually... the other article that three14 linked to enumerates the reasons here: http://www.goodthink.com/writing/view_stories.cfm?id=11&page_id=6 http://www.goodthink.com/writing/view_stories.cfm?id=11&... Quote: Manuel went on to inform me of things that further amazed and intrigued me: * According to Commercial Paper Law the money was now legally mine, because all checks are first assumed to be valid -- and the way a bank invalidates a check is by serving the depositor with a timely notice of dishonor. Considering that it took my bank 33 days to tell me my check had been returned, he did not think they had dishonored the check in time. * Fraudulent checks ARE a different manner. But he said, "Since you deposited the check 'thinking there was no chance it would cash, and without even endorsing it' -- you didn't commit fraud." * Getting the cashier's check was also not an act of fraud, since the bank had previously assured me the check could no longer be returned. * There are two practices of law as seen through the eyes of a court: (1) Black Letter of Law, where the court rules strictly by the law (and I would be awarded the money) and (2) Chancery Courts, also known as Courts of Compassion, where the court disregards the law when it is deemed non-sensical. He said that, "Easily a court could disregard the law and give the money back to the bank because really you have no claim to this money from an equitable sense of the law." And then he added, "And when it's an individual vs. a Bank, I'm sorry to say that courts usually side with the bank."
- dhugiaskmak 14y ago
  > But he said, "Since you deposited the check > 'thinking there was no chance it would cash, > and without even endorsing it' -- you didn't > commit fraud." But he did deposit the check with the thought that it would cash. He wouldn't have done it otherwise, since it wouldn't have been funny.
  - DanBC 14y ago
    No, he said that he thought there was no chance it would clear. He said that he imagined the phone call from the bank to tell him that the cheque was nonsense. I don't know if that's enough to avoid fraud. In England he'd have to pay back the cash, and any interest earned on the cash, and he'd have to have good lawyers to get off any criminal charges. I think; IANAL etc.
dalore 14y ago
What about signatures? Surely the signature has the match the one on file or the cheque bounces?
- sudonim 14y ago
  How would that process work? Check gets deposited in ABC bank (issued by XYZ bank). ABC bank sends a scan of the check to XYZ bank. And XYZ bank has an employee whose job it is to look at every inbound check to make sure the signature matches? Or maybe they have computers to recognize the signature and compare them for similarities. If it's too different, then it's flagged and sent to an employee for further review? I suppose it's possible that this happens. I honestly have no idea. Next time you write a check, sign it "Snoopy" and see if it still clears. My guess is that it would.
  - IChrisI 14y ago
    I used to sign checks as Nickname Lastname, rather than my given name. I eventually had one bounce due to "signature not as drawn". I do have very legible handwriting though.
  - spacemanaki 14y ago
    > Or maybe they have computers to recognize the signature and compare them for similarities. If it's too different, then it's flagged and sent to an employee for further review? Yeah, that'd be nice, and I think it's well within the grasp of the big banks to deploy some image recognition software to do this, and yet I'm fairly certain they do not. Anecdata to follow... I recently had a blank check stolen from me and filled out with a completely fake looking signature, it was really almost cartoonish. Yet the bank (Chase) did nothing to stop this from being deposited by the thief, and debiting my account. I only found out a month or so later, and filed a dispute, which they resolved. But the only reason I noticed it was that I don't use checks very often, so even though the amount was not an outrageous sum, it stood out. The bank's suggestion to me, for the future, was to NOT USE CHECKS. Ever. The low level employees at the local branch, when I was there closing the account and opening a new one, told me NOT to order checks at all, and pay rent with a direct transfer or bill-pay feature. This is what people mean when they say the only innovation in consumer level banking is improvements to ATMs.
pushingbits 14y ago
This is why Knuth has stopped writing cheques, incidentally: "Nowadays almost everybody knows that it's dangerous to reveal your credit card number, or to have that full number on a printed document that somebody might find in the trash. Soon people will learn that it is equally dangerous to reveal the numbers that are printed in plain sight on every check. Forget signatures; banks have no time to verify them. The once venerable system of checking accounts is irretrievably broken. Before long, companies will find it impossible to give out paychecks without exposing themselves to unacceptable risk. One consequence of this debacle is, alas, that I can no longer write checks to reward the people who discover errors in my books. The system that I've been using has worked well for almost forty years; but recently I have had to close three checking accounts, and the criminal attacks on those accounts have caused significant grief to my bankers. (Certainly I do not believe that anybody who received one of my checks has been in any way a culprit. But all such recipients are entitled to bragging rights; therefore the numbers printed on those checks inevitably become known to random members of the public.) I cannot in good conscience continue to traumatize the people at my bank, who obviously have plenty of other things to worry about." http://www-cs-faculty.stanford.edu/~uno/news08.html http://www-cs-faculty.stanford.edu/~uno/news08.html
- seanx 14y ago
  A friend of mine had $3m stolen by his business partner who simply wrote out $500k cheques and took them to the bank. The bank oked the cheques despite knowing that he had no signing authority. Once it all came to light, the bank then sued my friend and drove him into bankruptcy. Fuck banks
  - cluda01 14y ago
    Wouldn't you be able to sue the business partner for that sort of behavior?
    - redslazer 14y ago
      Muc cheaper to get the money back from the bank and let them sue him. It was their mistake and they have lawyers fur such things.

by sudonim 14y ago

knowtheory 14y ago

Actually... the other article that three14 linked to enumerates the reasons here: http://www.goodthink.com/writing/view_stories.cfm?id=11&page_id=6 http://www.goodthink.com/writing/view_stories.cfm?id=11&... Quote: Manuel went on to inform me of things that further amazed and intrigued me: * According to Commercial Paper Law the money was now legally mine, because all checks are first assumed to be valid -- and the way a bank invalidates a check is by serving the depositor with a timely notice of dishonor. Considering that it took my bank 33 days to tell me my check had been returned, he did not think they had dishonored the check in time. * Fraudulent checks ARE a different manner. But he said, "Since you deposited the check 'thinking there was no chance it would cash, and without even endorsing it' -- you didn't commit fraud." * Getting the cashier's check was also not an act of fraud, since the bank had previously assured me the check could no longer be returned. * There are two practices of law as seen through the eyes of a court: (1) Black Letter of Law, where the court rules strictly by the law (and I would be awarded the money) and (2) Chancery Courts, also known as Courts of Compassion, where the court disregards the law when it is deemed non-sensical. He said that, "Easily a court could disregard the law and give the money back to the bank because really you have no claim to this money from an equitable sense of the law." And then he added, "And when it's an individual vs. a Bank, I'm sorry to say that courts usually side with the bank."

dhugiaskmak 14y ago
> But he said, "Since you deposited the check > 'thinking there was no chance it would cash, > and without even endorsing it' -- you didn't > commit fraud." But he did deposit the check with the thought that it would cash. He wouldn't have done it otherwise, since it wouldn't have been funny.
- DanBC 14y ago
  No, he said that he thought there was no chance it would clear. He said that he imagined the phone call from the bank to tell him that the cheque was nonsense. I don't know if that's enough to avoid fraud. In England he'd have to pay back the cash, and any interest earned on the cash, and he'd have to have good lawyers to get off any criminal charges. I think; IANAL etc.

dalore 14y ago

What about signatures? Surely the signature has the match the one on file or the cheque bounces?

sudonim 14y ago
How would that process work? Check gets deposited in ABC bank (issued by XYZ bank). ABC bank sends a scan of the check to XYZ bank. And XYZ bank has an employee whose job it is to look at every inbound check to make sure the signature matches? Or maybe they have computers to recognize the signature and compare them for similarities. If it's too different, then it's flagged and sent to an employee for further review? I suppose it's possible that this happens. I honestly have no idea. Next time you write a check, sign it "Snoopy" and see if it still clears. My guess is that it would.
- IChrisI 14y ago
  I used to sign checks as Nickname Lastname, rather than my given name. I eventually had one bounce due to "signature not as drawn". I do have very legible handwriting though.
- spacemanaki 14y ago
  > Or maybe they have computers to recognize the signature and compare them for similarities. If it's too different, then it's flagged and sent to an employee for further review? Yeah, that'd be nice, and I think it's well within the grasp of the big banks to deploy some image recognition software to do this, and yet I'm fairly certain they do not. Anecdata to follow... I recently had a blank check stolen from me and filled out with a completely fake looking signature, it was really almost cartoonish. Yet the bank (Chase) did nothing to stop this from being deposited by the thief, and debiting my account. I only found out a month or so later, and filed a dispute, which they resolved. But the only reason I noticed it was that I don't use checks very often, so even though the amount was not an outrageous sum, it stood out. The bank's suggestion to me, for the future, was to NOT USE CHECKS. Ever. The low level employees at the local branch, when I was there closing the account and opening a new one, told me NOT to order checks at all, and pay rent with a direct transfer or bill-pay feature. This is what people mean when they say the only innovation in consumer level banking is improvements to ATMs.

pushingbits 14y ago

This is why Knuth has stopped writing cheques, incidentally: "Nowadays almost everybody knows that it's dangerous to reveal your credit card number, or to have that full number on a printed document that somebody might find in the trash. Soon people will learn that it is equally dangerous to reveal the numbers that are printed in plain sight on every check. Forget signatures; banks have no time to verify them. The once venerable system of checking accounts is irretrievably broken. Before long, companies will find it impossible to give out paychecks without exposing themselves to unacceptable risk. One consequence of this debacle is, alas, that I can no longer write checks to reward the people who discover errors in my books. The system that I've been using has worked well for almost forty years; but recently I have had to close three checking accounts, and the criminal attacks on those accounts have caused significant grief to my bankers. (Certainly I do not believe that anybody who received one of my checks has been in any way a culprit. But all such recipients are entitled to bragging rights; therefore the numbers printed on those checks inevitably become known to random members of the public.) I cannot in good conscience continue to traumatize the people at my bank, who obviously have plenty of other things to worry about." http://www-cs-faculty.stanford.edu/~uno/news08.html http://www-cs-faculty.stanford.edu/~uno/news08.html

seanx 14y ago
A friend of mine had $3m stolen by his business partner who simply wrote out $500k cheques and took them to the bank. The bank oked the cheques despite knowing that he had no signing authority. Once it all came to light, the bank then sued my friend and drove him into bankruptcy. Fuck banks
- cluda01 14y ago
  Wouldn't you be able to sue the business partner for that sort of behavior?
  - redslazer 14y ago
    Muc cheaper to get the money back from the bank and let them sue him. It was their mistake and they have lawyers fur such things.