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."

Comments

Check Security

[Adrian Lopez]

Checks are insecure. The lesson: withdrawing money from people's account should require more than an account and bank routing number.

Re:Check Security

[fm6]

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.

Re:Check Security

[Anonymous Coward]

Checks are also obsolete except that they make convenient gifts, but it's still not that difficult to deposit into another's account given the number. And note that when you buy something with a check the amount is now instantaneously debited from your account but when you deposit a check, it takes at least a few days to a week to clear. Why the inconsistency?

I've also noticed that some particularly thieving rat-bastard banks, the ones that Obama is trying to bail out, treat in-person bank teller withdrawals as "cashed checks" and perform other anachronological voodoo to maximize fees should something go wrong. For example, say you make 3 charges and the charges are posted in chronological order when you check your balance. Then you charge again a day or two later, but the latest one overdraws you $1.25 . The bank's database will then rearrange the charges so that the expensive one is posted before the others, resulting in 4 overdraft fees when you should have been charged only one. That's a little too "tough" for an account which may as well be labelled "broke student", paying over 100 bucks for 1 or 2 dollars overdrawn. Extreme example, but it happens.

And to think those fuckers want a bailout. Credit unions FTW.

Re:Check Security

[c6gunner]

4 digits isn't very secure, since 4^4 yields only 256 possible combinations

Oh noes! Well, luckily 10^4 gives 10,000 combinations. Maybe you should get your bank to invest in better ATM keypads?

Re:Check Security

[Nerull]

You're going to wonder how you said that, I suspect, but think for a bit.

You just said a 4 digit number has only 256 possible values. Now count from 0 to 9999...

Re:Check Security

[ciscoguy01]

For some time I have wanted my bank to just return any documents, checks, credit card charges, *anything* that does not include my original signature personally signed by me in ink.
They don't have the ability to set my account to do that.
Walmart, Sears, Kragen, all have signature capture hardware on their cash registers. But why would I want my signature stored in any computer? I wouldn't. I could easily put any signature on any document with a computer. *Lots* of people can today. A printed, pasted, captured signature on a document proves *nothing*.
I just make an "X" on those systems.
If we ever get to court about one of those transactions I will be expecting them to produce an originally signed ink signature, personally signed by me, proving I was here today and signed that document.
Without that, well, clearly I wasn't here.
Which is the only purpose of signing *anything*. To prove I was there that day and that *is* my signature.

Also...

[Adrian Lopez]

I just found this 2005 MSNBC article that talks about Qchex.com (the company mentioned in the above), and check security.

checks are only the beginning

[Son of Byrne]

The real problem is the ACH system? It relies almost exclusively on blind trust. Trusting that whomever I'm debiting authorized me to debit them, etc. It always amazes me when I build an ACH file to send to the bank as part of my business and send it through without a hint of a question from the bank or the processor. They just merrily send the file on through. I guess the bank and processor are counting on me being a good citizen. Hmmm...

Day late...

[Fished]

Man, and I just NOW hear about this!

Re:You are kidding arent you?

[rubycodez]

of course there's a logical explanation. Linus took another much older OS called Minix written by a cranky old C.S. prof and changed the M to an L and an i to a u, and then distracted the professor with a meaningless and pointless argument about kernel architecture. Even after the Dr. found out about his former student's shameless plagiarism, he was just mostly relieved to find out that long haired dope smoking hippie Berkeley types would now target Linus' work with their "improvements" instead of "always trying to make my Minix into some kind of faggot BSD".

Linux unsuccessfully tried to compete with Microsoft on the desktop, until the KDE 4.x window manager managed to trump Vista in complexity, distracting eye candy, user confusion, bugginess and bloat.

No checks in Finland

[Anonymous Coward]

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.

Qchex.com - guilty of fraud?

[Dynamoo]

The implication here is that Qchex.com (and its parent (Neovi Data Corporation) are somehow the fraudsters.. they're not. If they are guilty of anything, it is that than ran an ill-advised business model which they naively assumed would not be used by organised criminals.

Heck, you can actually buy a check printer yourself which can even use the same magnetic ink that bank-issued checks use. Nothing illegal in that.