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FTC Kills Dirty Online Check Processing Outfit
coondoggie writes "The Federal Trade Commission today got a US District Court to stop permanently what it called the illegal operations of an Internet-based check creation and delivery service, and to require the group to give up over half a million dollars in ill-gotten gains. According to the FTC, Qchex.com created and sent checks drawn on any bank account that a Qchex user identified, but did not verify whether the user had authority to draw checks on that account. As a result, fraudsters worldwide used the Qchex service to draw thousands of checks on bank accounts that belonged to unwitting third parties. 'The evidence shows that the launch of Qchex.com was a "dinner bell" for fraudsters and resulted in a high number of accounts frozen for fraud...' said District Court Judge Janis Sammartino."
This is one of many things wrong with our current banking transaction system. It's not even the worst (though it is pretty bad). But the established financial institutions find the status quo extremely profitable, and aren't anxious to see it changed. So they write off the losses from the occasional fraud that they can't stick on somebody else.
I've often wondered if this institutional inertia is why online micropayments have never gained traction. The usual argument is that people prefer the alternatives (advertising supported media, flat rate subscriptions, etc.) But I don't see where these arguments have ever been tested by giving users a real choice.
Personal checks haven't been in use in Finland for 30 years. What we have is a system of personal direct deposits. So instead of authorizing the payee's bank to withdraw funds from your account, you transfer funds from your account to the payee's bank.
Yes, everybody is virtually forced to own a bank account.