Slashdot Mirror
Too Easy For Bank Accounts To Spring a Leak
The NYTimes has a cautionary tale of automated clearing house fraud. Parties unknown siphoned money from an individual's bank account. Nothing too unusual there, except that it was an elite private banking account at JPMorgan Chase, and the account holder is out $250K — the bank will only cover $50K of his loss. The $300K came out of the account in small transactions over 15 months. The bank offered no recourse except to open a new account, a large hassle given that the account is more than 20 years old and its holder writes a thousand checks a month. The article details how the spread of electronic settlements between banks has given rise to growing automated clearing house fraud — if anyone gets hold of the magic combination of account number and bank routing number, and once has permission to withdraw funds, all bets are off. Banks are unlikely to question future withdrawal orders. Moral of the story: go over your bank statements line-by-line every month, and question anything that looks funny.
I still can't believe that people in so-called "first world" countries still rely on cheques for financial transactions. Over here in Finland NOBODY ever uses cheques. Not business, not individuals.
Everybody uses electronic transfers, account to account. Transfers can be made online (usually authentication is done with a grid of disposable codes, once the grid is used up you automatically get a new one from the bank), in the bank (requires you to identify yourself with official ID, e.g. driver's license etc.) or by using a terminal in a bank or shopping mall (authentication by using a regular credit/debit card).
I pay my bills online, as does everybody else (including my 70+ year old grandfather).
Upside of using electronic transfers is that they are very traceable, you can always find out to whom an unauthorised transfer was made (as unlikely as that is. Even key logging software is useless as each access code can only be used once).