FTC Says Payment Processor Took Millions

coondoggie writes "The Federal Trade Commission and seven states have charged a payment processor with violating federal and state laws by debiting, or attempting to debit, from consumers' bank accounts on behalf of numerous fraudulent telemarketers and Internet-based merchants. Between June 2004 and March 2006, the payment processing company, Your Money Access, processed more than $200 million in debits and attempted debits to consumers' bank accounts. More than $69 million of the attempted debits were returned or rejected by consumers or their banks for various reasons, indicating the lack of consumer authorization, the FTC complaint alleges."

Comments

This place is bad news.

[mind21_98]

With most merchant accounts offering 99% approval rates, if your company falls in the other 1%, it probably can't accept cards anyway (due to the type of business or other factors, or you're just plain shady). I feel bad for the people defrauded by the merchants who used this processor. :(

Re:This place is bad news.

[thebear05]

The question I have is how do I know who is processing the charge even if I know I am being charged ?

Re:This place is bad news.

[GwaihirBW]

In general, I think the answer is that you don't . . . but the banks and the Feds do, and you can bet they keep records and track trends. Nearly 35% unauthorized charges implies that perhaps this processor is specifically courting fraudulent businesses, and is at the least not doing whatever vetting and verifying it's supposed to be.

This went on for nearly 2 years?

[RattFink]

It shouldn't take that long to find out fraud is going on with a company with a charge-back rate higher then 25%. Why the heck wouldn't the credit cards cut off the tap and mitigate their damages? It seems sort of foolish to me.

Re:This went on for nearly 2 years?

[GwaihirBW]

Well, it is kinda tiny in credit-company terms . . . $100 mil in a year is a drop in the bucket. Size probably kept it off the priority list, even if the rate did blip their radar. Now with a two year record, it's a really solid case to bring, creating a nice precedent-hammer to expedite further such cases and scare similar operators out of the business.

Re:This went on for nearly 2 years?

[deniable]

Well, the summary seems to say that the merchants in this case were scammers. The feds may have wanted to back-trace / follow the money. It probably also took time to collect enough evidence for the case to proceed while not tipping off the accused.

Re:This went on for nearly 2 years?

[Anonymous Coward]

You mean the credit card companys that scammed us all for the last 10 years on forigen exchange rates and finally got caught on that themselves?

(Oh yeah... www.ccfsettlement.com Get your share of the settlement. at least $25 of it anyway. the lawyers will get most of it.)

So these people scamming us didn't shut down some other companys scamming us too? No way! I'm hmm... less than shocked..

Re:This went on for nearly 2 years?

[profplump]

Because the credit card company doesn't actually have damages. They don't even get bad PR. Here's what happens:

1. Bad Man, Inc. charges you through his CC processor, Bad CC Processor, LLC
2. Bad CC Processor, LLC forwards the charge to your CC company.
3. You notice and dispute the charge with your CC company.
4. Your CC company gladly removes the charge from your account.
5. Your CC company refuses to pay Bad CC Processor, LLC.
6. Bad CC Processor, LLC refuses to pay Bad Man, Inc.

Now, if the CC processor wasn't dirty, they'd eventually refuse to process charges from Bad Man, Inc., because he's obviously a fraud. But they are dirty, so they don't do anything. And if Bad Man, Inc. wasn't dirty he'd probably provide evidence to support his charges and try to get payment. But is his dirty, so he doesn't do anything.

At no point in that process does the CC company lose any money, other than a few minutes of telephone support time. They probably know that Bad CC Processor, LLC is dirty too, they just don't care. Obviously it would be good for their customers if they refused to accept charges from Bad CC Processor, LLC, but they aren't very motivated because, while they have to deal with some fraud reporting, they don't lose any money, don't really risk their reputation, and still get to process the successful 65% of charges that come in. If you've ever worked in a sales-oriented company, you'll know that it's essentially impossible to get sales to walk away from existing revenue streams, even if you could sustain a better profit margin on other types of business.

Re:This went on for nearly 2 years?

[Belial6]

Because this was not credit card fraud. It was debit card fraud. Given that regular debit cards need a pin to access the account, it means that this was 'check card' fraud. I don't know why anyone would be surprised by this since Visa advertises that these cards are easy to commit fraud with. This was inevitable, and will only get worse until people start to raise a stink with their bank for trying to screw them by issuing 'check cards' instead of regular atm cards.

It always amazes me how many people think it's a good idea to carry a card that give access to their checking account with no pin, no id, and not even a signature.

Re:This went on for nearly 2 years?

[Anonymous Coward]

Except that in your example above, you orignal vendor has the cash already, before the dispute gets returned. THEN the processor can try to take it back, but if it's not in the account or get's rejected (think stop payment) then the processor is out the cash. If this happens too much the processor drops the merchant. But then again, they're both shady, and therefore probably just splitting the fees they do collect and the costs incurred.

Re:This went on for nearly 2 years?

[larry bagina]

The CC company (Visa, Mastercard, American Express, etc) isn't bad (or at least, they're not the bad ones in this example).

Re:This went on for nearly 2 years?

[Aqualung812]

There is a problem with your list at step 5. You are missing step 2(a), where CC company pays bad CC Processor, LLC. Bad guy has his money at the end of the day in most cases. Since they have already been paid, step 5 is more like:

5. Your CC company requests proof of transaction

6. Bad CC company provides tainted proof

[decision tree]

6(a). Your CC company calls the lawyers

6(b). Your CC company makes you prove that the charges are false

6(c). Your CC company decides (a) and (b) will cost more than just eating the cost

Guess what two they do the most? B and C. In credit cards, almost all of the risk is on the card issuer. The vendor has some slight risk, but only if they don't follow procedures. The card holder has very little risk since Visa and Mastercard force the issuers to pay if there is a dispute. The processor has zero risk.

Re:This went on for nearly 2 years?

[foniksonik]

Check cards require a PIN to get cash out of an ATM. They require a signature for purchases over $25 in most places. Most check cards are also now actually VISA or Mastercard backed... ie you can dispute the charge just like a credit card. In some respects they are really just credit cards secured by your bank account... you post a transaction via credit and it gets processed by VISA et al whom draws from your bank account to cover the charge.

IMHO it's much better than cash if you like to have a paper trail to help do your taxes later.... receipts always fade and are difficult to store.. logging on to your bank website and downloading your transaction data is much more convenient and easier to run reports on.

Re:This went on for nearly 2 years?

[encoderer]

I'm not sure what you've been given by your bank.. but I've always been under the impression that there is no such card in existence (one that requires neither a pin nor a signature).

A "debit card" (as issued by US banks at least) is merely an ATM card bearing a Visa or MasterCard logo. It can be used as a regular ATM card (with a pin), as a "check card" (again, by using a pin at the POS), and thirdly as a credit card (by signing the receipt).

As with all credit cards, though, if you chose that option, no signature is required for small purchases (less than $15?). Of course, at card-not-present merchants (internet, phone), electronic authorization (the "click here to agree" box) is used in lieu of signature.

If that's what you're getting at-- the internet transactions that of course can't be "signed" -- then you're missing the point: If you chose to process your debit card as a credit card, thru the CC network, you get credit-card-like protections from fraud.

Re:This went on for nearly 2 years?

[encoderer]

And also, according to TFA, these were electronic debits. That means the consumer used the "Pay by check" option (Amazon and loads of merchants offer this now) and they ponied-up their routing number and account number.

It had nothing to do with a "check card."

Re:This went on for nearly 2 years?

[GooberToo]

If you chose to process your debit card as a credit card, thru the CC network, you get credit-card-like protections from fraud.

Not so. Debit cards have different pricing structures associated with their processing. Credit cards have federal banking laws which guide what can and can not be done. Debit cards do not fall under these same guide lines.

The reason debit cards are so popular with merchants is they tend to cost a lot less to process. The reason being, they tend to offer far less liability for the merchant and processor. Why do they have less liability? Because the card holder, in many cases, is assuming much of that liability. Furthermore, you have zero charge back authority as a debit card user; unless explicitly granted by agreement with you bank. Meaning, you often only have the same protection as any other check writer. This is not the same protection afforded to credit card users.

After saying all that, many banks do extend credit card-like protection for debit card users; often with caveats. But you need to check your bank. Assuming you have the same protection is beyond foolish. To make matters even worse, the fraud picture is completely different for debit card users versus credit card users.

A merchant committing fraud with a debit card can cause no end of problems for debit card users. This is not true for credit card users. If I'm a fraudulent merchant and I wipe out your checking account via your debit card, bluntly stated, you're fucked. It may take you months, IF EVER, for you to recover that money. If a fraudulent merchant does the same thing with my credit card, who cares. I still have cash in my account to make ends meet and there is no pressure to dispute because my next meal doesn't depend on dispute resolution. Worse, all the checks you wrote no bound and you owe hundreds, if not thousands, in bounced check and late payment fees. Plus, your credit score just took a serious ding. You're now a dead beat as far as your creditors are concerned.

Long story short, only fools, unless they know otherwise, use their debit card when a credit card is available. And even then, from a fraud protection perspective, only idiots use their debit cards anywhere other than their bank.

Re:This went on for nearly 2 years?

[encoderer]

Actually, you should check your facts.

Any bank that issues a card with the Visa or MasterCard logo has agreed to meet or exceed the consumer protection policies of Visa or MasterCard. This is how it's ALWAYS been, debit card horror stories notwithstanding.

Visa:
"Debit cards have the same security protections as credit cards. Just like credit card cards, debit cards have Zero Liability* fraud protection and dispute resolution options."
http://usa.visa.com/personal/using_visa/personal_finance/debit.html

MasterCard:
"With your debit card, you'll enjoy great features such as worldwide acceptance at millions of locations, MasterCard Global Service, and Zero Liability* protection from unauthorized purchases."
http://www.mastercard.com/us/personal/en/aboutourcards/debit/standard_card.html

No, this protection is not mandated by LAW as it is with Credit Cards, but it is mandated by Visa and MasterCard who have ZERO INTEREST in seeing their good name tarnished.

Everyone has heard Debit Card Horror Stories. My suggestion is to have a critical ear and check the facts, instead of just passing-on the FUD.

Re:This went on for nearly 2 years?

[coyote-san]

You seem to be confusing true debit cards (where you must enter a PIN, can get cash back, etc.) with the credit cards with immediate automatic payment. They're the same piece of plastic and appear to have the same behavior, but are actually very different things.

In fact, that's why you'll often find modest fees associated with 'pin use'. If you use it as a credit card, normal credit card processing fees apply and (iirc) the bank gets a small cut as issuer. If you use it as a debit card, the bank has to take a small hit. That's why you're usually out some cash if you use your ATM card at a 'foreign' bank. (Nicked a buck or two by your bank -and- by the ATM's bank.) The banks want to encourage credit card use over debit card use, so they'll add a small charge to the latter. Merchants want to encourage debit card use (since they'll get the full amount, iirc) so you might get a small promotion to use it as a debit card.

Re:This went on for nearly 2 years?

[Belial6]

Either you did not read what you linked to, or you did not understand what it said. Yes, they gave their policy a secure sounding name, but if you read the policy, it is not even close to being "Zero Liability". The Astrix next to the name should have given you a clue that you should read the details a little more critically.

Re:This went on for nearly 2 years?

[Belial6]

"Check cards require a PIN to get cash out of an ATM. They require a signature for purchases over $25 in most places."

The problem isn't that the good guys can use a secure method to access there money. The problem is that the bad guys can use an insecure method.

"ie you can dispute the charge just like a credit card."

The difference is that you are trying to get your money back, instead of refusing to pay for someone else's charges. You also recieve no protection from the cost that cascade from the original fraud. Neither Visa nor your bank are going to pay the increased interest charges on other loans when they triple in cost due to their insecure card.

"In some respects they are really just credit cards secured by your bank account... you post a transaction via credit and it gets processed by VISA et al whom draws from your bank account to cover the charge."

No, it is a credit card that is secured by *you* that can later be disputed with your bank. This is fundamentally different.

"IMHO it's much better than cash if you like to have a paper trail to help do your taxes later.... receipts always fade and are difficult to store.. logging on to your bank website and downloading your transaction data is much more convenient and easier to run reports on."

No, carrying a credit card is better than carrying cash, as you get all of the same benefits without the increased risk. About the only people that a 'check card' makes sense for is people with credit so bad that they just cannot get a credit card. These people are few and far between.

Re:This went on for nearly 2 years?

[GooberToo]

LOL.

Please remember that when you checking account has zero dollars and you're working to get it back...all the while your other checks are bouncing and you credit is going to crap.

But hey...if you want to ignore facts, please go ahead.

Re:This went on for nearly 2 years?

[GooberToo]

You seem to be confusing true debit cards

Wrong. I clearly said debit cards. Debit check cards are different but still do not provide credit card protection.

Re:This went on for nearly 2 years?

[GooberToo]

BTW, I used to be in the credit card industry. Specifically, transaction and clearing house processing.

Re:This went on for nearly 2 years?

[encoderer]

No, it's not "zero liability" for all transactions. In fact, that only applies to a few select types of fraud. For all other signature-based transactions, there's a $50 cap on liability. Last time I checked, that's the same liability cap on my Visa and MasterCard branded Credit Cards.

Perhaps YOU should've read the links and the linked-to liability policy?

I never said there was "zero liability." I said (twice, in fact) that the liability exposure was simply no greater than that of a credit card.

Re:This went on for nearly 2 years?

[Belial6]

Which is NOT all of the liability that is associated with fraudulent use of a 'check card'. What part of money not being in your checking account causing all sorts of peripheral liability don't you get?

This isn't a case of some people spreading FUD. It is a case of other people buying into marketing lies hook line and sinker.

Re:This went on for nearly 2 years?

[Belial6]

Of course you are STILL wrong. The peripheral liability caused by having insufficient funds in your in your checking account is dramatically greater than that of having a credit card maxed out. So, no there is not a $50 cap on liability. Saying that there is a $50 cap on liability is marketing speak. In fact what they mean is that there is a $50 cap on liability to your bank. The liability to other entities caused by insufficient funds does not have any cap at all.

If you can point me to the spot where they agree to pay any and all bounced check fees/penalties, and all interest that is added to an account due to increased rates from a bounced check, I will concede defeat in this debate.

Re:This went on for nearly 2 years?

[GooberToo]

Really? You think? What are you on? Do you honestly believe the BS you're saying or are you just stupid?

First of all, there are LOTS of bank issued *check cards* which have no affiliation with Visa or Mastercard. This is actually the majority as they are far more profitable. Second of all, go read what I said.

The only person looking silly here is you. And that's reinforced by your position as it's clear you're trying to ding me for speaking in absolutes where I clearly did not. I specifically did not. Even further proving your low IQ, is the fact that I specifically said to contact your fucking bank to find out what coverage you do have...because **gasp** some do a pretty good job.

Regardless, even if they provide superior protection than credit cards, as I already explained, you're still a fucking moron for using a check card. Zero cash in your account is still zero fucking cash. And I don't care what you think you read, they are not going to return it to you the day you call to complain. Most take 30-45 days to resolve. It's not uncommon for some to go 120+ days. And in some cases, the money is NEVER returned. Are you really that fucking stupid? We'll obviously the answer is yes...because I'm already repeating my self.

Good luck. I sincerely hope you get targeted by a scam so you can see just how stupid you are.

Re:This went on for nearly 2 years?

[encoderer]

Do tell.. what is this "peripheral liability?" I mean, there are 3 things people could do with your checking account info..

1. Deposit into it
2. Withdrawal from it
3. Give the info to somebody else, who can recurse those 3 options.

I personally wouldn't mind #1, their policy covers #2, and federal criminal law covers #3.

So... what, exactly, are you talking about?

Your lack of specifics in both your posts communicate the fact that you're talking out your ass.

Re:This went on for nearly 2 years?

[DavidRawling]

I believe that Belial is attempting to point out the following series of actions:

1. You have $10K in your day to day account (to which a Visa or Mastercard Debit card is attached).
2. Your debit card number is used in a series of fraudulent transactions totalling $32,450.
3. Your account is overdrawn, netting you a $30 fee from your bank.
4. You dispute all the charges.
5. You cannot pay your mortgage (and your salary is only beginning to make a dent on your debt to the bank). This costs you an extra $2000 in interest charges each month, along with fees for failure to pay. The bank graciously extends your mortgage rather than foreclosing. The debit from your account is declined, netting you a $50 fee from your bank each month.
6. You cannot pay your electricity bill. You get charged penalties. The debit from your account is declined, netting you a $50 fee from your bank each month.
7. You cannot pay your water bill. You get charged penalties. The debit from your account is declined, netting you a $50 fee from your bank each month.
8. You cannot pay phone, gas, and other bills. You get charged penalties. The debits from your account are declined, netting you $150 fees from your bank each month.
9. Visa/Mastercard and your bank send you a letter requiring a statutory declaration (or equivalent in your country) saying you didn't auth the charges, even though they have no signature.
10. You cannot buy food. The debit from your account is declined, netting you a $50 fee from your bank each month.
11. You die from starvation. The debit from your account for your funeral is declined, netting you a $50 fee from your bank.
12. The $32,450 is refunded to your account. It pays off part of the debt caused by the recurring overdraft charges, interest charges, payment declined fees, and the extra interest on your mortgage.
13. Your wife is forced to sell the house to pay off the mortgage. She and your kids live in poverty after she is forced to declare bankruptcy.

Total cost for 2 years of disputed charges that were never yours: $55,200 (24 months of $2000 mortgage interest and $300 fees/overdraft charges, ignoring any other costs incurred as a result of the fraud).
Total refund from Visa/Mastercard/Bank: $32,450.

Total cost to you: $22,750.

(Note: Some items above may have been slightly dramatized to increase their impact)

Re:This went on for nearly 2 years?

[DavidRawling]

Oh, notice I'm not saying he's correct, or wrong. I suspect it will depend entirely on your own specific circumstances.

But I think I have explained what he meant.

Re:This went on for nearly 2 years?

[Repton]

Huh?

For card-not-present fraud (such as internet purchases), the merchant wears the cost: if the cardholder complains of fraud, the issuing bank will issue a chargeback (assuming they believe the cardholder). The merchant will end up out of pocket, and will probably have to pay a penalty fee as well. That's why issuing banks don't care about online card fraud: they just pass the costs on to the merchants.

Re:This went on for nearly 2 years?

[Belial6]

Yes. That is a dramatic version of what I meant. The biggest hit many people would take would be in that it is very common for credit cards to raise their interest rates from a very good 20% if you have a bounced payment. For all of those people that carry credit card debt, this can be a very expensive problem. But the numerous overdrafts and penalties from those that got the bad checks can easily add up to hundreds of dollars that is not covered by the zero liability*.

Re:This went on for nearly 2 years?

[encoderer]

Looks like somebody got Mod Points today. Oh well. They'll be dinged in Meta-Moderation and anybody still reading this thread is going to read ALL the posts, not just those mod'ed >1.

And i'm so thoroughly into Excellent Karma that it would take this guy and his 20 friends to REALLY do any damage.

I take this as sure proof that I spanked your ass SO HARD that this was the only recourse. I *LOVE* it.

Anytime, bro. Whenever you want to be put in your place, just let me know, I'm available. You can post drivel and I can post well thought-out, well written, referenced posts that will make you want to go home and cry to your mommy :)

Re:This went on for nearly 2 years?

[encoderer]

Since some tool abused the moderation system, I've decided to re-post everything I wrote. This way it goes back to +2 and everybody can see it and enjoy my wit :)

Again, here's a cross-post. I want you to feel stupid as soon as possible, and by cross-posting I can ensure you feel stupid a couple seconds earlier than you otherwise would...


"Visa's cardholder protection policy requires all financial institutions issuing Visa products to extend provisional credit for losses from unauthorized card use within five business days of notification of the loss. However, many major financial institutions affiliated with Visa will issue provisional credit even earlier--within 24 to 48 hours after the loss is reported." http://usa.visa.com/personal/security/visa_security_program/zero_liability.html

It just so happens that my bank offers 24-hour cash replacement. And a cursory look at the policies of other major banks (Wells, Citi, BoA, Chase) confirms the "24 to 48 hour" window.

Re:This went on for nearly 2 years?

[encoderer]

Since some tool abused the moderation system, I've decided to re-post everything I wrote. This way it goes back to +2 and everybody can see it and enjoy my wit :)


God, this is so much fun.

1. I specifically said "a card with the Visa or MasterCard logo."

2. I know you're not speaking in absolutes. That's because people like you who have no clue what they're talking about use language that's as general as possible to try to hide the fact that you have no clue what you're talking about.

3. And HERE'S where you look stupid again...


You talked out your ass and said...
". And I don't care what you think you read, they are not going to return it to you the day you call to complain. Most take 30-45 days to resolve. It's not uncommon for some to go 120+ days. And in some cases, the money is NEVER returned."

But the FACTS are...
"Visa's cardholder protection policy requires all financial institutions issuing Visa products to extend provisional credit for losses from unauthorized card use within five business days of notification of the loss. However, many major financial institutions affiliated with Visa will issue provisional credit even earlier--within 24 to 48 hours after the loss is reported."
http://usa.visa.com/personal/security/visa_security_program/zero_liability.html

It just so happens that my bank offers 24-hour cash replacement. And a cursory look at the policies of other major banks (Wells, Citi, BoA, Chase) confirms the "24 to 48 hour" window.

I really hope you reply because I'm having a really great time over here rubbing your nose in it. Just put your tinfoil hat back on and carry on with your normal business. It'll save you both time and embarrassment.

Re:This went on for nearly 2 years?

[encoderer]

"If you can point me to the spot where they agree to pay any and all bounced check fees/penalties, and all interest that is added to an account due to increased rates from a bounced check, I will concede defeat in this debate."

Since you never responded to the post where I did, in fact, point you to such a spot, I'm left to assume that your silence is your concession.

Well played. But next time, bring, ya know, facts. :)

Re:This went on for nearly 2 years?

[encoderer]

Since some tool abused the moderation system, I've decided to re-post everything I wrote. This way it goes back to +2 and everybody can see it and enjoy my wit :)


More FUD without anything to back it up.

Here's a more extensive excerpt from Visa. Emphasis mine.

" Visa's Zero Liability policy took effect April 4, 2000, and is a great improvement on the previous policy. The former policy required that you report fraudulent activity within two business days of discovery. After this two-day period, you could be held responsible for up to $50 of the unauthorized charges. With the new Zero Liability policy, you're no longer required to report fraudulent activity within two days and you're not responsible for any fraudulent transactions made over the Visa network.

The Zero Liability policy covers all Visa credit and debit card transactions processed over the Visa network--online or off. The only transactions not covered under the Zero Liability policy are commercial card, ATM, and non-Visa-branded PIN transactions. "

OK, i think I've made you look like a fool enough today, wouldn't you agree?


There. This is the last of my re-posts. In two weeks when the loser gets another 5 mod points he can come back and mod all these down, too. He already wasted his mod points on a thread that won't be read by anybody but those already involved. But since this unnamed mod was probably connected to one of two of you, this should work nicely to piss you off a bit :)

Besides, the beatin' I put down on you 2 with these posts was so good that they're WORTHY of being posted twice. I'm not arrogant about it. I was just the only person here interested in the FACTS of the situation. All you could do is post your own opinion and say "trust me, I know what I'm talking about." Facts win every time, bro. Every time.

took [OT]

[Seumas]

The title of this article made me, for the first time in my entire life, notice that "took" is a really weird word.

ouch, reject fees?

[marcushnk]

I'm not sure about in America but here in Australia if someone tried to debit money from your account and it fails YOU the account holder get slugged a fee.
I wonder if this was the case for all the failed unauthorized attempts...?

Re:ouch, reject fees?

[timmarhy]

you wouldn't think so because what your talking about are dishonor fee's, and only get applied if there isn't enough money in your account.They can't charge you a fee for a fraudulent transaction, or if they did i'd be screaming blue murder all the way to the accc.

Re:What a load of bollocks

[Anonymous Coward]

>> If you don't know what you are talking about why not just shut the fuck up?

wow, you're just a big meanie... digg.com is calling you.

That's why credit cards are better

[TheLink]

That's why credit cards are better than debit cards for cardholders.

With debit cards when stuff happens, the money is gone from YOUR account.
You then spend a lot of time and resources trying to get the money back.

With credit cards when stuff happens, the money is gone from someone else's account.
You then contact the card company and say "Nope, I didn't buy that".

See how much the banks and FTC etc care about those fraudulent debits? Yes they care, but obviously not that much.

But if you're a merchant when stuff happens with credit cards, ouch. Good luck getting money for the stuff you sold. Sometimes the chargebacks can happen months later.

Re:That's why credit cards are better

[rucs_hack]

You're sort of right, but credit cards can be a bad thing if you share one with someone and the relationship is ending. At least with a debit card the worst they can do is empty your current account.

My neighbor of a few years back had his wife walk out having spent tens of thousands on credit cards in the weeks before, *and* emptied his bank account for good measure (then demanded alimony, nice lady..). He never managed to get her to pay the card bills directly, but took all the money back as a 'shared expense' from the house sale, on which he made a handsome profit, as in 100k.

Plastic money of all kinds scares me to be honest. It's an evil I have to cope with, but credit cards are a bad idea.

Re:That's why credit cards are better

[Markus Landgren]

When Apple Computer made a fraudulent charge to my debit card, it only took a phonecall to the bank and a mailing in of the form they sent me (postage already paid on the response envelope they sent me by the way). Sure enough, the money was gone from my account but it was back within 48 hours from picking up the phone, and of those 48 hours I spent 10 minutes actively working on the case. Not a lot of time spent, and no other resources spent except the ink for the form and the saliva for the envelope.

Re:That's why credit cards are better

[fbjon]

I agree, a debit card is a direct extension of cash, which means if it isn't on the account, it can't go anywhere. I even have a separate account from where I move money to the account connected to the card, just to avoid having all my savings in one stealable basket.

Re:That's why credit cards are better

[Nursie]

Whilst it's true to a small extent, it's not entirely.

You simply call the bank and tell them that the charge you are disputing was not authorised. The same rules apply. You may have to wait a few days, but that's it.

Or do things work differently in the great US of A?

Re:That's why credit cards are better

[Firethorn]

This might sound strange, but my parents* each have individual credit cards, not a group account.

They both have excellent credit, so there's no problem with one not being able to get a card. From watching court tv, joint credit cards is a big way to get in trouble. Person A of reasonable financial management and income hooks up with person B of no financial management and no income. Person A lends, cosigns loans and credit cards because B can't get them, then wonders why B gets in trouble, overspends, and otherwise doesn't pay anything. My thought is that 'Credit card companies and lenders obviously know something if they're not going to give B any credit'.

About all they share is a joint checking account, though they also have individual accounts.

*both accountants, which might explain why I'm screwed up.

Re:That's why credit cards are better

[fbjon]

I can set that limit on my card to anything, up to some amount. Also, it's a Visa Electron, so not a regular card because there's no credit at all: funds are drawn from the account on the spot.

Re:That's why credit cards are better

[jandrese]

No, people just think they work differently because they've never read the documentation that comes with their debit cards. Really, debit cards generally have the same liability policies that credit cards have, although it's a little cheaper for the merchant because it's assumed that if you require someone to punch in a PIN to make the transaction then it's less likely to be fraudulent (the signatures on Credit Cards really don't offer much protection at all).

Re:That's why credit cards are better

[sabt-pestnu]

Careful who you give
that saliva to...

Re:That's why credit cards are better

[Fulcrum of Evil]

And what about the money that isn't in your account? Also, bounced check and overdraft charges suck.

Re:That's why credit cards are better

[Nursie]

The money that isn't in your account comes back to you after a short delay. Maybe a couple of days, which is an inconvenience but not usually the end of the world.

It comes back because the bank are legally bound to give it back the moment you tell them that you didn't authorise that transaction. The bank also remove the bounced check and overdraft charges because what happened was their fault, not yours.

Re:That's why credit cards are better

[Nursie]

I'm fairly sure debit cards have the same protections here in the UK. That's why I asked if things worked differently.

On that topic I'm constantly amused by this one credit card firm that markets online fraud protection as one of their major features. I'm amused because all consumers are protected from that by law. As the gp said - people don't realise these things.

Re:That's why credit cards are better

[rucs_hack]

well, my bank gives me an automatic overdraft facility

I have always refused to have an overdraft. I've had bank peoples get quite annoyed with me over the years about this, after all they like punters to be in debt, selling debt has always been a big money thing. One even issued me with a credit card once. I went to see the bank manager, gave him the card cut up into pieces, and said that if it happened again I'd close my account.

I am unique among the people I know in that I am the only person to go through undergraduate university and then a four year phd without once going overdrawn.

Ok, a few weeks of living on toenails and tapwater from time to time, but I see it as a win overall.

Re:That's why credit cards are better

[Fulcrum of Evil]

they do this after much wailing and gnashing of teeth. Much better to avoid the problem, since it doesn't save me money anyway.

Re:That's why credit cards are better

[TheLink]

With credit cards the money is still in your account while you "wait".
With debit cards the money is gone while you _wait_.

Very big difference to me :).

"Alleged IOU" in somebody else's pocket vs my money in somebody else's pocket.

Maybe most people think that's practically the same thing, but I don't.

Re:That's why credit cards are better

[Markus Landgren]

They're not all like that. Just switch to a bank that doesn't hate its customers. It's that simple.

Re:That's why credit cards are better

[Nursie]

Yes, but the original poster made it sound like you'd be waiting weeks or months for the outcome of legal battles and tracking the money and stuff. You aren't. You tell the bank that the transactions were not authorised and they refund them. It may take 48 hours. 48 hours is an inconvenience but not the end of the world.

Re:That's why credit cards are better

[TheLink]

Where do you get your 48 hours figure from? Who guarantees it? Is it the law or it's just part of the "terms and conditions are subject to change" stuff.

From: http://www.federalreserve.gov/pubs/consumerhdbk/electronic.htm

"The financial institution must promptly investigate an error and resolve it within 45 days. For errors involving new accounts (opened in the last 30 days), POS transactions, and foreign transactions, the institution may take up to 90 days to investigate the error. However, if the financial institution takes longer than 10 business days to complete its investigation, generally it must put back into your account the amount in question while it finishes the investigation. For new accounts, the financial institution may take up to 20 business days to credit your account for the amount you think is in error."

"On lost or stolen credit cards, your loss is limited to $50 per card (see Lost or Stolen Credit Cards). On an EFT card, your liability for an unauthorized withdrawal can vary:

Your loss is limited to $50 if you notify the financial institution within two business days after learning of loss or theft of your card or code.
But you could lose as much as $500 if you do not tell the card issuer within two business days after learning of loss or theft.
If you do not report an unauthorized transfer that appears on your statement within 60 days after the statement is mailed to you, you risk unlimited loss on transfers made after the 60-day period. That means you could lose all the money in your account plus your maximum overdraft line of credit, if any."

It sure ain't rosy for debit cards in the US of A.

So, please post some evidence to back your statements. Post the relevant _authoritative_ links for UK if you prefer. I'm now curious on how great debit card protections are in the UK.

Re:That's why credit cards are better

[Nursie]

There's a difference between "lost or stolen cards" and fraud liability.

If you have lost your card you have some liability. If you have had it stolen you need to tell the company ASAP and have very minimal libaility. IMHO.

As for citations:

The Banking Code which all UK banks are signed up to. Check out section 12.12

Admittedly this is a voluntary agreement and not backed by law, but it's a start.

The BBC say that the law states you are not liable for any fraud if you are still in posession of the card.

Can't find a relelvant law right now (and am not entirely sure what to search for), but those ought to get you started.

Re:That's why credit cards are better

[TheLink]

Sorry, I'm having difficulty finding the 2 days or 48 hours you claimed before, in the PDF you linked to. I don't even see any promise on any time limits on when you'd get your money back, or when the Bank would credit it back to you in good faith. As mentioned earlier - the US banks are supposed to do that within 10 days under normal circumstances.

Even if what you claim is true it's still so hard to find I bet the UK bank staff themselves don't know of such a promise/law, so there's no guarantee in _practice_ you'd get your money back in 2 days. You might still have to do all that calling etc I mentioned earlier to convince them to credit your money back in a timely manner.

As for the BBC (who aren't a bank or bank regulator), they also say stuff like this:
http://news.bbc.co.uk/1/hi/programmes/working_lunch/3957903.stm

Quote:
"The holiday did not materialise. So where does Mr Morrisey stand? With regard to the holiday, whether you are covered or not depends on the type of debit card you use."

Not very reassuring to me.

If it was a credit card, I would have more options. More money in account = more options. More money I could use to pay for help. Credit cards are even better than cash in such cases.

As it is you should only use debit cards as poor and risky substitutes for credit cards if banks refuse to give you a credit card and where cash and cheques aren't a decent option.

Re:That's why credit cards are better

[Nursie]

Oh, I'm sorry, I thought you were genuinely interested in this stuff, not just trying to be an asshole. I told you that my links weren't complete and I didn't have the time or energy to look for more. I invite you to look for yourself. No, the BBC are not a legal or banking institution. They are a British news source, and a very good one.

Your closing comments are utterly ridiculous. You should only use debit cards where you can't get credit and cash is no option? What nonsense.

Oh and this "Even if what you claim is true it's still so hard to find I bet the UK bank staff themselves don't know of such a promise/law" is also wrong, the banking code is a basic and fairly well known code. Their employees would have to know about it.

The holiday example there was not fraud in the way I was talking about, the cardholder agreed to the transaction and then didn't get the goods. That's a different matter. He was a complete IDIOT to do what he did as well, not using an accredited agent under the ATOL organisation. In fact the fact that he 1. Believed an internet site when it told him he'd won something and 2. proceeded to then pay them for it, tells me that Mr. Morissey was a grade A moron who was going to find some way to get himself scammed sooner or later. I'm only suprised it wasn't more cash and given in order to pay a few fees to get his TEN MILLION DOLLARS transferred out of nigeria... Even if the man had paid in cash he would have been screwed.

You are still protected if someone starts charging things to your card without your permission. You are not protected from being stunningly stupid.
You also don't run the (very real) risk of getting into serious debt. A lot of people do with credit cards, and whilst that is their own fault it's an easy trap to fall into it seems. Hence the enormous levels of consumer debt in the US and UK.

Meh, whatever. I and my fellow europeans will continue using our debit cards, y'all keep on doing what you're doing, having vast amounts of debt is obviously working for you.

Re:That's why credit cards are better

[TheLink]

You were the one confidently telling people that they can use debit cards and if stuff happens, they can call the bank up and in two days they'll get their money back, no fuss and trouble.

And now you imply I'm trying to be an asshole, when you can't even come up with any evidence backing your claims.

If things turn out not as rosy as you painted and people believed you, they might be rather "inconvenienced".

FWIW, I _am_ an asshole, I sometimes try not to be one, unfortunately I don't succeed often enough.

Oh well, take comfort that even if I'm not convinced by your arguments, the Mr Morriseys of Slashdot might be :).

erm

[rucs_hack]

yeah, nice family friendly tagging there..

On topic though, who on earth doesn't check to see whether what they are being billed for is what they actually owe? Ok some did, which is how they got caught, but obviously not everyone did.

I check all my bills every month, especially ones prone to change, like amazon/Audible/other online shopping orders and suchlike. I didn't always have to be so thorough, but there's this thing called the internet, and apparently not everyone on it is a cuddly bundle of trustworthiness.

Re:What a load of bollocks

[somersault]

Was that meant to be a joke? I've never heard anyone in the UK use those phrases, so shut the fuck up.

Re:What a load of bollocks

[LaskoVortex]

http://www.google.com/search?hl=en&q=shut+the+bugger+up&btnG=Search

Top hit ring a bell?

Re:all your money are access by us

[psysjal]

No really you didn't.

Does not appear to be CC related. RTFA

[Shivetya]

They keep refering to "bank accounts" which implies to me that they have the routing number and account number. Most likely preying on people with bad credit who could not get Credit Cards

Defendants withdrew funds from consumers' bank accounts in one of two ways: by electronically debiting consumer bank accounts through the Automated Clearing House Network or by submitting checks and falsely representing that the consumers had approved them.

See http://www.allamericanpatriots.com/48738769_illinois-ag-madigan-joins-six-states-ftc-suit-stop-florida-company-fraudulent-debits

So this is a case of direct taking from accounts or use of fradulenet checks. That is why no Credit Card company raised an alarm, they were not even in the loop

Re:Even if they paid me to use it...

[MLease]

Well, I can tell you weren't paying attention to the topic you were replying to.... :)

-Mike

Can't be bothered

[Nursie]

If the bill's about what I'm expecting then why check every single item?
I could be doing something fun instead.

And I sure as hell don't keep receipts to check what I think I've spent against what the bank think, I'd be drowning in paperwork.

It's all a hassle and largely unnecessary.

Re:What a load of bollocks

[billcopc]

Yup. 35% chargebacks is the kind of thing that Visa/MC would shut down in a matter of hours.

It is such a royal bitch to launch a legit credit-card processor, thanks to all the irritating rules to cover up the flaws created by the cards themselves. The credit companies make a ton of money by defrauding both the client and the merchants, with a whole assortment of fees and fines, but they're in a position where it's near-impossible for a a retailer to refuse credit cards without losing most of your business. The only reason these companies thrive is because people suck at finances. If there were a non-credit payment system, usable worldwide (or almost) that can offer instant authorization and online processing, the entire internet would flock to it in a heartbeat.

Is that like an NSF fee?

[phorm]

Around here, we have NSF (Non-sufficient-funds) fees, which basically say that if you write a bad cheque etc that gets rejected due to lack'o'cash, you get hit with an extra penalty. In this case, the transaction was perfectly legit on behave of the party requesting money, but the money just wasn't there to pay them.

The same does not apply to debits that have been rejected due to the requesting party having insufficient authority to make a withdrawal.

Re:What a load of bollocks

[A nonymous Coward]

Could we then say the equivalent is "shut the bug up"? Or is that only valid in non-Disney animated insect movies?

Re:What a load of bollocks

[somersault]

Nope, still the wrong usage :p Face it, there's no beating STFU (so much so that I have a t-shirt proclaiming that I went to STFUniversity :P)

Lil' background info

[quietwalker]

It seems some people are confused about the nature of the Automated Clearing House, and making very odd assumptions. Since some of this is due to a conflict in terminology, hopefully I can clear this up. ACH is a big network. You might say it's really a collection of protocols and legal policies that allow banks and credit card companies to talk to each other. Every time you use your debit card in a non-branch office (like a Wells Fargo card in a Bank of America ATM), you're using ACH. Now, I'm going to skip the in-depth network topology and give you the highlights. In short, the entire setup consists of Vendors attached to a Payment Processor , which are attached to ACH, which is responsible for routing a transaction from one ACH member to a Financial Institution (like a bank or credit card company). Vendor->Payment processor->ACH->Financial Institution. Now, why not have the Vendor connect to the FI directly? Well, each vendor would need a connection for every card. As in physical lines. That makes it expensive for everyone, and hit-or-miss for the consumer - what if they don't support YOUR card? Okay, so, why not have the vendor connect to the ACH directly? Well, when you make a transaction on the ACH, there's no additional security. Basically, it's assumed that you have the authority to make the transaction, or you wouldn't be doing it. Imagine getting a credit card scanner and service for like 300$, quickly making several hundred thousand in fraudulent charges, and skipping the country. Generally speaking, you need to be an established business with accountability to be allowed to connect to the ACH - and that's where payment processors come in. Oh, and quick terminology lesson. In ACH parlance: A debit means "take money from an account" A credit means "put money into an account" They have nothing to do with credit cards, or debit cards, or anything of the sort. Payment Processors, usually make money per transaction, or per connection time. Either way though, they profit from vendor transactions whether valid or not, so there's a good incentive to 'look the other way' with problem vendors. So, this payment processor was following all the rules, but they're charging it as sort of an accessory to criminal acts by their customers. The states are saying that they knew these were invalid debits, but they processed them anyway, just to make money. Technically it would be the vendors that have to suffer here, but the states are trying to hit every target they can, especially when busting a little work-out-of-your-house-2000$-laptop-scammer is not worth the money spent sending them to trial.

Re:Lil' background info

[Hatta]

I'd love to read your post, but the lack of line breaks makes it impossible. Please format your posts!

Mod Parent Up. Totally Accurate.

[mpapet]

This is one of the few times an accurate comment has been posted on debit/credit stories. Learn well.

Re:What a load of bollocks

[GwaihirBW]

Sorry, I mis-spoke. Clearly, as you say, it's not a credit card co. I'm just used to my debit and credit cards being handled by closely related companies (if I've read the fine print correctly), and so I lump them mentally and occasionally interchange them when it's really inappropriate. What I was intending by using the term "credit companies" was to include not just banks but any other (debit, but that got lost in the mental shuffle) card issuing financial services, and that's just what came out without further thinking. I did, in fact, RTFA.
However, once corrected for the [blatantly wrong, yes] terminology, I believe that my point stands - $100 mil is certainly a drop in the bucket for banks, etc. (As evidenced by the fact that this *did* go on for 2 years, as so many have pointed out that it would not have for credit.)

Re:What a load of bollocks

[GwaihirBW]

Re: first statement: yes, sorry, see response to original.

Re: your last statement: I doubt it. It would be a good idea, yes . . . but consumers are easy prey for credit debt precisely because they like the illusion of free money and the ability to spend what they don't have. As you said, "The only reason these companies thrive is because people suck at finances." - A debit-based system would require them to be able to pay immediately for everything, which would in the long run save them tons of money, but they simply don't get that. They'd still want the credit card, and if necessary the credit card companies would throw out a few more carrots to convince users to continue to demand credit card acceptance, passing alon any costs to the merchants if possible.

Personally, I like my credit card 'cause it gives me a global discount and up to a month's float on an interest-free loan, because I pay it off in full consistently. (So they offer me fun incentives like "0% interest for a month!!" to help me build bad habits. Nice try.) Of course, they'll probably eventually figure out a way to trip me up if I don't do it myself.

Re:Does not appear to be CC related. RTFA

[jandrese]

Yeah, and wire fraud or check fraud is a PITA too, since unlike credit or debit cards there is very little protection beyond what your bank feels like giving you. That's also why it took 2 years to get these guys I suspect.

"jamais vu"

[Estanislao Mart�nez]

Probably an incident of jamais vu.

(Note that by linking to that article I am not endorsing it. There's some stuff there that sounds very much like it's nonsense somebody made up.)

Re:What a load of bollocks

[Dogtanian]

Top hit ring a bell? If you didn't understand from the other replies, let me explain very simply; "the bugger" refers to a person, (probably in a mildly insulting but humorous manner). It's akin to saying "shut the asshole up" or "someone shut that asshole up".

Bollocks isn't remotely a replacement for "fuck" anyway- it's much milder, doesn't mean the same thing and isn't interchangable with "fuck" in the majority of situations.

Oh, and in a nice case of the pot calling the not-very-black-kettle black (*), I believe it was your lot that invented (and seriously) use the euphemism "freaking". Use that word in this country and people would think you were freakin... uh, *fucking* stupid.

(*) Yeah, I'm a literary genius. :)

Re:What a load of bollocks

[LaskoVortex]

It was not my intention to start an American vs. Brit literary battle. Who would honestly suspect that anyone would believe the American literary tradition in any way compares to the British--outside of extension? I was trying to point to the fact that "shut the fuck up" is crass and meaningless in any sort of sensible discussion. I'll try to be less subtle next time.

Re:What a load of bollocks

[billcopc]

Buddy, I sell porn, and I hate the credit companies. If the porn industry (on all levels) stops accepting credit cards in favor of debit, people will switch to debit, and believe me, we want to! There are few things more insulting than paying fees to a credit processor who is constantly looking for excuses to ruin your business. It's not the merchants who are high-risk, it's the customers! A merchant could jump through a million hoops to ensure zero fraud, if a few of the buyers call in a fraudulent chargeback that merchant's getting slapped anyway.

We trade blacklists of fraudulent buyers. I've heard a story, that I believe as the truth, of one buyer who called in a pretty big chargeback (upwards of $1000). It was one of many merchants who had been burned by this one individual. The last guy to get screwed actually called in some thugs and had the squirmy fraudster beat the *@&# up.

The problem here...

[encoderer]

The problem here is that, according to Visa regulations, that $32,450 would be put back into your account within 5 CALENDAR days at the maximum. Moreover, MOST banks have a policy of crediting your account the balance within 24-48 hours. In fact, that's the policy of a few major banks I checked yesterday, including Chase, BoA, Citi and Wells Fargo. It turns out that MANY banks offer 24-hour replacement, including mine.

Which means that your scenario would end at step 4.

To see proof of this, just look in this thread. I've cited everything. It's in one of these posts.

(Note: None of this has been dramatized. I don't waste my time with drivel and only post facts.)

Re:What a load of bollocks

[SkunkPussy]

Well old bean, not only did you do just that, but you made yourself look ignorant and unintelligent in the process. Toodle-pip.

Re:What a load of bollocks

[LaskoVortex]

SHUT THE FUCK UP!

Re:What a load of bollocks

[Dogtanian]

It was not my intention to start an American vs. Brit literary battle. Who would honestly suspect that anyone would believe the American literary tradition in any way compares to the British--outside of extension? You missed the point. When I said "Yeah, I'm a literary genius" I was being sarcastic (pretty obviously, I thought) and taking the piss out of *my own* clumsy attempt to rewrite a cliche for my own use. It had nothing directly to do with what I was saying to you.

Re:What a load of bollocks

[Raenex]

I would have thought that a lot of your chargebacks would come from parents or housewives, not fraudsters.

Re:What a load of bollocks

[billcopc]

Nope, those ones we fight back. The only way someone can (consistently) weasel their way out of a porn charge is to argue that their credit card info was stolen. That argument doesn't hold much water when the merchant can prove (via Geolocation) that the purchase was made from the cardholder's computer (or at least the same city/area). The fact that the guy's wife objects to his porn consumption does not undo the consumption nor the service provider's expense (bandwidth).

If you buy a car, and your wife doesn't like it because it's not a fuckin' Toyota, you still have to pay it. I don't care that you married an ignorant bitch.

Re:What a load of bollocks

[Raenex]

How often do you win chargebacks using Geolocation? My impression was that online service providers pretty much lose all of their chargeback cases, and it's even worse when porn is involved.

How bad is your chargeback percentage anyways? Do you fly under the 1% radar? What percentage do you process in refunds?

Just curious, mind you. I used to work for a payment processor. As a rule we wouldn't take on gambling or porn (even turned down the Girls Gone Wild folks), though we took other dubious merchants who were providing less of an honest service than the porn guys.