A Man Walks into a Bank

http://www.ft.com/intl/cms/s/2/93a47a62-daf0-11e1-8074-00144feab49a.html

by jkharness87 • 14 years ago

479 174 14 years ago

three14• 14 years ago

More details (many more...) here: http://www.goodthink.com/writing/view_stories.cfm?id=11&...

corin_5• 14 years ago

Good story, shame (though understandable) that it cares more about promoting his show than actually finishing the tale for readers.

DeepDuh• 14 years ago

"So... WHAT HAPPENED?"

If you want to know what happens next, order our DVD now!

jj_aa2• 14 years ago

IIRC from this guy's site, before it was a show, he had a stand-off with the bank for a while before learning that this check was holding up a merger between his bank and another company, so the whole executive suite was freaking out. Eventually he gave the check back with no repercussions and some token like a letter of apology.

bryanlarsen2• 14 years ago

That's not fair. He makes it quite clear at the beginning that the whole story is free but that you will see requests for tips or to buy the DVD.

Remember that this story was written in 1995. Internet advertising was generally not available then, and neither was proper etiquette for advertising. I do not blame him for trying to partially monetize his thousands of hours of effort. After all, it's not like he kept the money.

lincolnwebs• 14 years ago

That wasn't a story, it was a trailer.

Tichy• 14 years ago

Could be some entirely different scam? Like they could write cheques in the names of old people with lots of money in the bank, then, if some people cash them in, they could approach them and ask for their money back. If some people comply and don't check carefully who the money originated from, they have extracted some money from random people who may or may not have noticed it.

Not sure how cheques work in the US, though - I think we don't have them anymore in Germany.

It is a common scam here to be asked to receive some payments on your bank account and pass them on. When the original owner discovers it, you are the culprit and not the scammer...

Xylakant• 14 years ago

We still have cheques in germany. They're rarely used and of limited usefulness in most cases, but if you want to hand over large amounts of money, they can be useful [1]. Our Ex-President Wulff notably received the loan for his house via check.

[1] Auctions for example, where the payment must be delivered immediately and cash would be impractical. Usually, in that case, a "Bundesbankscheck" is used which is as good as cash: http://de.wikipedia.org/wiki/Best%C3%A4tigter_Bundesbank-Sch...

wrath• 14 years ago

Am I missing something here?

The transit, bank and account number on the check must all be fake (or I would hope that this get-rick-quick company didn't actually send their real bank information!). So whether or not the check has non-negotiable printed on it is a mute point. The check cannot be routed anywhere and would have been flagged immediately. This is not the good ol' days of bank fraud, ala Catch Me If You Can.

Does the fact that he knowingly deposited a fake check constitute fraud in the US?

joelrunyon• 14 years ago

If it was fake, wouldn't the bank have figured it out when they tried to transfer the money?

Maybe it was a case of "america's stupidest criminals." I don't know the details, but weirder things have happened.

Symmetry• 14 years ago

They might have just Photoshopped an image of a check the company had laying around, in which case the routing details, etc, would all be correct for some unlucky entity out there.

mseebach• 14 years ago

If that was the case, the company sending out the checks would be due for a lengthy prison-term on a couple thousand charges of mail fraud.

mbetter• 14 years ago

^moot

fatbird• 14 years ago

He knowingly deposited a fake check, expecting that the exact clearance mechanisms you mention would catch it, and the deposit rejected. As evidence that he wasn't committing fraud, he didn't endorse the check, so no intent to commit fraud.

He only got stubborn about it after 1) the bank far exceeded the deadlines for dishonoring the check, rendering the money legally his, and 2) when they tried to retrieve the money, they strongarmed him with security officers rather than approaching him as an adult.

What's missing from the FT version is that the initial freezing of all his accounts caused him some hardship and scared his mother, and once he spoke to the bank security officer about this and his original intent, and that he knew the law surrounding this, the bank backed off, unfroze his accounts, and started dealing with him with much more civility.

eslachance• 14 years ago

The question is, can this be repeated? Junk mail creators haven't necessarily seen this story, they may not know that they are in error.

Would some sort of penalty be applied to someone depositing such a check, assuming one received such a check and it does have all the necessary features?

DiabloD3• 14 years ago

I'm sorry, but from what I know of banking law (ianal, nor do I play one on the Internet, but it helps to know enough to defend yourself from banks)... why isn't he in jail? I thought knowingly doing what he did constitutes bank fraud and numerous other charges?

veyron5• 14 years ago

He didn't generate a fraudulent check, so he didn't do anything illegal. It's akin to receiving a forged bill and then using it at the next place.

corin_5• 14 years ago

Worth noting that (at least according to him) it's not just that he didn't make the fake cheque, it's that when he gave it to his bank he meant it as a joke, he wasn't actually trying to get the money.

isleyaardvark• 14 years ago

Knowingly using a forged bill is illegal.

petenixey• 14 years ago

This story was from a little while back but what's to stop you just printing a cheque from someone else and paying it into a bank today? There's no alerting to the originator that a cheque's been paid out and there are no obvious authentication tokens on the cheques.

Frank Abignale only had to get past an initial look-test so what techniques protect against (and are consistently used) to prevent cheque forgery today?

sudonim2• 14 years 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• 14 years ago

Actually... the other article that three14 linked to enumerates the reasons here: 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."

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dalore2• 14 years ago

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

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pushingbits• 14 years 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

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daigoba66• 14 years ago

That's the thing, I'm pretty sure check clearinghouses are near real-time these days. At least in the US. Deposit the check and within a few minutes it'll either clear from the other bank or bounce.

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usefulcat• 14 years ago

Unless it's a large check, in which case it's normal practice for a bank to put a hold on all but a small portion of the funds for several days. The exception is for deposits which occur regularly from the same source, like payroll.

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wiredfool• 14 years ago

Nope, it's still a batch process. Usually the day's batch is collected and sent to the Fed, and then the bank gets their net debit/credit for all their transactions. It'll generally show in accounts the next morning. (Note that there are many details here about exactly which method is used and if there's a third party exchange).

Checks can come back anywhere from nearly instantly (e.x if there's a bad routing number) to a day or two (insufficient funds, or bad accounts, or unauthorized on a commercial account) to a month or two (unauthorized on a personal account) to many months (fraud, US treasury checks). The last can be a real killer, since they're normally big checks on trustworthy accounts (though, not necessarily from trustworthy intermediates).

Checks are never really cleared, they just haven't bounced yet.

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mikeash• 14 years ago

I think the main thing is vigilance on the part of the supposed check writer. If you notice a check drawn on your account that you didn't write, you call your bank and get it reversed. Then they go after the depositor for fraud. It's nowhere near 100% reliable, of course, but the mere threat of prosecution helps keep it down. Keep an eye on your accounts....

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nostromo• 14 years ago

You could similarly ask why people don't forge credit cards or banknotes. The short answer is: they do. :)

The long answer is that you're risking being caught and charged with fraud.

What's interesting about this story is that it's not clear any fraud had taken place -- although I doubt the bank sees it that way.

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wsh• 14 years ago

For business checking accounts, many banks offer a "positive pay" service, where customers submit files with the dates, check numbers, and amounts of authorized checks they have issued, and only those checks are paid automatically; checks not listed in a file are automatically returned unpaid.

Variations on this service give the customer access to a Web site with a daily exceptions report, or to a list of all checks for amounts greater than some threshold, from which the customer can instruct the bank to pay some checks and return others. The default is usually to return the check unpaid, since Article 4 of the Uniform Commercial Code gives banks a strong incentive to return any item they aren't going to pay before midnight on the next banking day after it was received.

These services used to be fairly expensive, but I see that some banks are now offering them for free or for a modest fee ($40 a month at Chase), perhaps because they shift some responsibility for fraud control to the customer.

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njharman• 14 years ago

> what's to stop you just printing a cheque from someone else

Going to jail for fraud is disincentive enough for most.

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ChuckMcM• 14 years ago

Sadly if you want to see a forged Cashier's check you need only try to sell a car on Ebay. There is a scam, that works like this:

1) You advertise an item of value X

2) Person 'buys' it. Sends you a cashiers check.

3) "whoops, they typoed the number and the cashiers check is for $1000 more than your car (or boat or whatever)" Go head and deposit it, take out the $1000 'extra' and send it back to me.

The check is forged, the fraud depends on banks giving legitimate customers access to 'some' of the funds right away and holding the rest until the check clears. The victim gives away the $1000, and their property, the crook rides off, and 3 days later the check bounces.

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dabeeeenster• 14 years ago

I once paid a fairly big cheque (> 10k sterling) into the wrong business account. It cleared but I only realised the mistake a couple of weeks later.

I rang the bank (Santander in the UK - terrible bank don't use them) and they said "Oh yeah, we generally don't check the payer".

Really.

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alan_cx• 14 years ago

To amuse: Dunno if things have changed here(UK) but a cheque can be (or could be) anything. It's just a bit of paper with some details on it. In fact, I'm not sure there is a requirement for it to actually be on paper. Legend has it some students in the UK banked a cow (yes a large moo moo thing) because it had the right details on it.

Anyway, if this fake cheque had all the right details on it, or enough to make the transaction, how is it fake? Or how could it clear if the details were wrong? Surely US banks clear the cheque before crediting the account with the money?

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nicholassmith• 14 years ago

The internet comes to the information rescue: http://www.guardian.co.uk/notesandqueries/query/0,5753,-2043...

It was close enough to being a real cheque aside from 'non-negotiable' and a whole host of other things on it to make it invalid, except the law prevented those things from mattering which turned it into a real cheque. Seems a bit fishy, but if the law says that it was a valid cheque, and it's been paid there's very little they can do except sue, which of course is how any big boy wins a fight these days.

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staticshock• 14 years ago

Legend has it some students in the UK banked a cow

Not according to snopes: http://www.snopes.com/business/bank/cowcheck.asp

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pavel_lishin• 14 years ago

I swear the entirety of this story used to be online. I suppose he took it off to help his sales, and I'm too lazy to find a cached version.

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telemachos• 14 years ago

See three14's post[1] in this thread. He gives the link - the story is still online:

http://www.goodthink.com/writing/view_stories.cfm?id=11&...

[1] http://news.ycombinator.com/item?id=4344785

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robbiemitchell• 14 years ago

The last page will try to sell you on the DVD. Just change the page_id to "16" to read the conclusion.

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DanBC2• 14 years ago

There's a reasonably well known scam where BadBob will order £2,500 worth of goods. The cheque will be sent, made out for £12,500.

BadBob then calls and tells you to cash the cheque, send the goods when the cheque clears, and to just money transfer the excess when the cheque clears.

As this story shows a cheque clearing means almost nothing. The bank will discover the fraudulent cheque, normally a long time after you've sent the goods and the extra cash to BadBob, and they will take the money off you.

You are out the time; the goods; and the extra cash.

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timkeller• 14 years ago

Remind me why we still have cheques in our banking system?

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freehunter• 14 years ago

Because cash doesn't leave a paper trail and not everyone can accept cards.

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jarek7• 14 years ago

And third point necessary here: because U.S. banks don't have any other reasonable inter-bank transfer system.

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VMG• 14 years ago

I'd like to know that too. Never seen one in my life in Germany.

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etfb• 14 years ago

Same reason you still use miles and pounds and degrees Fahrenheit in your measurement system: inertia.

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Goronmon• 14 years ago

It's still an easy way to transfer money between two people, especially if your bank does mobile deposits through a smartphone. At that point, the check is really just a paper record of a transaction you intend to make with the bank account information prefilled for you. You don't have to worry about banks or devices utilizing different technologies, it just works...for the most part.

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snowwrestler• 14 years ago

Because they work very well for certain types of payments.

Think about why this story is so noteworthy: because this sort of thing happens so rarely. The vast, vast majority of checks are written, sent, and cleared without fraud or incident.

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corin_5• 14 years ago

A couple of people have already linked to the author's website where the original story is, but for those of you who (like me) read the FT article and then wanted the ending... rather than reading the entire, rather lengthy, story (which begins at http://www.goodthink.com/writing/view_stories.cfm?id=11&...) you can skip right to the conclusion at http://www.goodthink.com/writing/view_stories.cfm?id=11&... - just the first few paragraphs.

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megablast• 14 years ago

He returned the cheque after getting a written letter from the bank, and had to pay for the interest he made.

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z02d• 14 years ago

There was a link to the same story afaik last year

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crusso• 14 years ago

Look at the date on the check: April 26, 1995.

This guy has been milking this story for quite some time.

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fishercs• 14 years ago

Most systems today are completely automated, they'll check that the routing number is valid but not the account number the check is drawn on. Routing numbers don't change, but hundreds of thousands of account numbers are created every day throughout the US.. banks are different on how they do their internal account numbers, different algorithms are used when generating these account numbers. I work for a relatively small bank and on a normal day we'll clear 100,000 checks.

With the changes put in place after 9/11 and the Check 21 legislation float has diminished quite a bit but it still exists. Unfortunately there's just so much blue tape that banks are required to jump through that money that is fraudulently acquired takes some time to get back.

the reason this even happened is he was a good standing customer, and they did have his account information so of course they let him deposit it. it would be the responsibility of the bank that the check was drawn off of to catch the mistake. The man's bank just issues a credit to the bank that is drawn on.. it's when that bank catches the error they have to send off for a correction, this normally takes quite a bit of time.. we're talking 2-3 weeks especially in 1995.

the minute the man withdrew the cash their internal system red flags such a large withdrawal amount, this is why the bank was suddenly made aware of that transaction.

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bryanlarsen2• 14 years ago

"suddenly made aware". According to the long version of the story, FICAL was made aware of the error within the 24 hour window, but did not notify Combs until almost 3 weeks later.

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portman• 14 years ago

I remember this story flooding the Internet in 1995. I'm confused why the author is doing a "one-man comedic show" 17 years later.

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barking2• 14 years ago

The banking crisis has made it topical again.

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cs702• 14 years ago

Because there's persistent demand for it -- from a public that is evidently outraged at the longstanding behavior of banks and the fact that virtually no high-ranking bank executives have paid for it.

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SandB0x• 14 years ago

He probably needs the money

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mhb• 14 years ago

He wants HN karma.

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redwood• 14 years ago

Has it been 17 years since 1995? OH MY

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dasil003• 14 years ago

Argh, 20-year high school reunion coming up. 10-year didn't seem so bad, 20-year means OLD.

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snorkel• 14 years ago

In other words, banks use lazy evaluation to validate checks.

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kitsune_• 14 years ago

I live in continental Europe, can someone please explain the American cheque system to me? Is it still widely used?

We have giro and SEPA transfers. If I want to transfer money to someone, I simply order my bank to withdraw said amount from my account and transfer it to the destination account. I could even do this without having a banking account. Anybody could walk to a post office or bank and pay into someone's bank account with cash on hand.

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rbanffy• 14 years ago

In a lot of places, a check is just a payment order written on a standardized and somewhat convenient piece of paper. At least in Brazil, if I write the same text that's on a check and sign it, you can take that piece of paper to my bank and demand the money.

That said, it's been so long since I last used my checkbook, the bank changed its name and my account number since it was printed. And yes, they are still valid.

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melvinmt• 14 years ago

Wire transfer is the same as giro, except a single wire can cost you around $18 to send AND receive money while checks are always free (by law I guess).

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smackfu2• 14 years ago

It's much less widely used than it once was, especially among younger folk. The only checks I write are to settle up personal debts between trusted folks, and that happens maybe once every 6 months and only if they don't have Paypal. Everything else is done via direct bank transfer or electronic bill payment.

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ahi• 14 years ago

Checks are widely used for rent, payroll when direct deposit is not setup, and by the old person in front of you at the grocery store checkout when you're in a rush. In the US, checks are basically a paper method to "order my bank to withdraw said amount from my account and transfer it to the destination account." The laws regarding what makes a valid check are (or at least were) rather loose. Someone once paid his taxes by writing a check on the side of a pig and delivering it to the IRS.

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peckrob• 14 years ago

American here. Checks are basically little pieces of paper (about the size of two credit cards; they usually come in a book of 25-50) that allow the recipient to make a demand against my account. I write on the check the name of the recipient, the date, the amount (in two places, one in long form and one in numeric form) and sign the bottom. They have a set amount of time in which they can deposit the check (I think it's somewhere between 30 and 90 days, but I can't remember). The recipient endorses it on the back by signing it and deposits it at their bank, and their bank handles transferring the money between the banks and into the appropriate accounts.

Printed on the bottom of the check is my account number and a routing number for my bank. They're printed in a format called MICR, which uses magnetic ink (or used to, not sure if they still do) so that computers can scan them quickly. When I worked at a grocery store in the 90s, our systems were supposed to actually verify whether or not a check was "good" by checking the amount against the amount available in their accounts. Not sure if this really worked, because I never saw a check get rejected.

It used to take several days for the whole thing to play out. What would happen is that, when the recipient deposited one of my checks, their bank would credit them the amount of the check immediately (there are some limitations on this depending on the size of the check; banks have various policies about that) and the check would enter the inter-bank system. A day or so later, the actual amount would be withdrawn from my account.

In most places, passing a bad check (called "bouncing") is a crime, though most banks will provide some type of overdraft protection (usually with an accompanying steep fee) to keep you from getting in trouble with the law.

Checks were widely used up until the early-mid 2000s, when debit cards started to become widespread. These days, they are primarily used by the elderly who refuse to adopt newer technology, in businesses that do not use direct deposit, and in complex financial situations (such as purchasing real estate). Other than that, the vast majority of purchases in America happen via the card networks.

I write maybe three checks a year and receive maybe two. Everything else is done online or by the card networks. And best of all, when I receive a check, my bank (USAA) lets me just take a picture of it with my iPhone and immediately credits me the amount, as a scan is considered a valid reproduction of the check.

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joakin• 14 years ago

Is the cookie warning normal? European laws applied?

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corin_5• 14 years ago

What looks scary to you? Most sites give you cookies without asking you, so why is being told that it happens more scary?

Anyway, the reason for it is an EU directive, find out about it from the UK government branch tasked with these things, the Information Commissioner's Office: http://www.ico.gov.uk/for_organisations/privacy_and_electron...

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derda• 14 years ago

It amazes me everytime, that in the US day-to-day banking still consists mostly of writing, sending and cashing cheques.

In germany (I dont know about the rest of Europe, but I guess the situation is similar), cheques are virtually non existent. You can still get and cash them, but you will get weird looks from the person behind the bank counter, most of the time there will be a hefty fee associated with it(I once cashed a cheque from an US-bases affiliate program and my bank charged me a ridiculous amount for the process).

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veyron5• 14 years ago

Checks are still useful because most online transfer mechanisms cost money. For example, my bank recently started charging for ACH transfers, and wires are always expensive.

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theorique2• 14 years ago

Yeah, exactly.

I was going to try some new method (PopMoney?) to pay my roommate for rent and utilities, and then I noticed it cost $1 per transaction. Back to paper checks (= free).

It's not the fact that it costs something - a dollar is no big deal - it's the fact that the alternative is free.

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kolinko• 14 years ago

The question is - why are online transfer mechanisms expensive? Wire transfers should be much cheaper than checkques.

In Poland (although we're a much smaller country), wire transfers cost from free to 30 cents (doesn't matter how much you send, you could wire $1M and still pay 30 cents), and take from an hour to a working day to process.

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k33l0r• 14 years ago

In Finland cheques are pretty much completely unused. Domestic bank transfers are pretty much free for all private people and almost everyone pays all their invoices electronically via their online bank.

To transfer money from person to person, the only information you need is their bank account number and name. As far I can tell, there's no way that you could use the account number in a malicious way (which is why charities and companies can publish their's with no repercussions). With the introduction of SEPA and IBANs, this now applies to the entire EU.

What's more, credit and debit cards are accepted almost universally (with a few exceptions), which means that I hardly ever carry cash with me.

I think you can get a cashier’s cheque if you really need to, but I think cheque books have completely disappeared (I don't even know if I could get one if I really wanted to).

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adrianmsmith• 14 years ago

It's a law or rule somewhere, that if you do electronic transfers between Euro countries (i.e. a good portion of the EU, and thus certainly within one Euro country) it has to be free. So checks don't offer that advantage here in Euro-Europe.

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ansgri• 14 years ago

Can't you use cash? I honestly can't understand most of the comments as it seems here in Russia there's no concept of a check, or at least no 'real person' ever used anything like that.

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stephen_g• 14 years ago

That's interesting, because it's the opposite in Australia. I would have to pay a fee to get a chequebook (I'm not sure if it's per-annum or per book, probably depends on banks) but on my accounts I have unlimited free transfers to any bank in Australia. Pretty much all personal accounts here get that - some business accounts still have to pay a few cents per transfer, but free online transfers are becoming a lot more common for those.

I also have a free EFTPOS (Maestro/Cirrus) and Visa Debit card, and can pay bills at no extra cost using the BPAY system from my online banking, so I never write cheques at all...

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johnchristopher• 14 years ago

In Belgium as well. But when parents decided to sell my grand-parents' house located in France I heard a lot of cursing about the antiquated french cheque system and the administration being obsessed with it.

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stinkytaco• 14 years ago

I have not used a check for several years, nor has anyone I know. My bank gets a deposit from my job and I use a bank card to withdraw cash or a credit card to make purchases (the credit card is paid everymonth with an automatic bank draft). I think that's pretty standard unless you're a small business or require some sort of paper trail.

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sausagefeet• 14 years ago

Checks are unheard of in Sweden at this point too. What is really annoying is I still do some consulting in the US and for some reason a lot of places will only pay a consultant with a paper check. Absolutely ridiculous. They have to mail the check across an ocean just for me to take a picture of it and deposit it back in the States.

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takluyver• 14 years ago

In the UK, as in so many things, we're half way between Europe and the US. Cheques (spelled like that) are rarely used, but most people have a cheque book in a drawer somewhere.

Bank transfers here are free, but the recipient has to give you their account number & sort code, so you might use a cheque to give money to a friend. Private landlords might require the rent as postdated cheques. If you send a membership form by post, you might be able to enclose a cheque to pay for it, though it's more common to set up a direct debit.

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ABS• 14 years ago

> Cheques (spelled like that) are rarely used

looking at all the people protesting the proposed removal of cheques in UK last year I'd say that's not the case :-)

Sadly many (relatively) big business and countless public bodies only pay and accepts payment by cheques. As an example only this year City of London Corp started accepting bank transfers for rent deposit. 2 years ago I had to dig up my business cheque book and bring a cheque to their offices for an office rent deposit.

Take a look at the "Treasury - Written Evidence - The end of Cheques?" http://www.publications.parliament.uk/pa/cm200910/cmselect/c...

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frogpelt• 14 years ago

I'm not sure that it is as much this way anymore.

You are required to have direct deposit where I work and I only write checks to individuals or to businesses that don't accept debit/credit card transactions.

This story took place in 1995. Some things have changed in the last 17 years.

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gst• 14 years ago

The Zahlschein that is still very common in Germany isn't really any more modern than a check.

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duaneb5• 14 years ago

It's free, personal money transfer that you can cancel if someone steals. What's not to like?

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jarek7• 14 years ago

The multiple-day clearing process? The need to transfer a physical item to transfer a couple of numbers?

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greggman• 14 years ago

Checks don't exist in Japan for the most part either.

On the other hand, rent in Japan is usually paid by bank transfer at $6 per transaction (done at the ATM or online). Checks, in the USA, are free, no transaction fee

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josteink• 14 years ago

I remember asking my bank about "travel checks" because I read online that this was the best way to pay when abroad.

They just looked at me like I was mad and said "nobody uses those any more. Just use your bank card and withdraw cash in ATMs as needed".

They literally told me that nobody (as in "no banks", locally) did checks anymore and that they could not be issued even if I wanted them. This was 10 years ago.

So yeah. US banking is stone age.

And at the same time the US is the world leader in electronic, financial trading with millisecond-trading (microsecond-trading?) being the norm among the big trading companies.

It really doesn't make much sense.

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goostavos• 14 years ago

Many places in the US charge ridiculous "Convenience" charges to pay with a credit card. I pay my rent with a check. Why? Because they charge me almost $40 for the "convenience" of using my MasterCard. Same thing when I had my car loan. $15 convenience charge to pay online with a credit card.

It's complete crap, and a total racket. Unless I want to pay >$50 month for the luxury of paying my bills in any modern way, I'm back to writing checks.

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akandiah• 14 years ago

This does not always work in the favour of the client. As mentioned in the bottom of the article, a similar incident took place in New Zealand. The couple involved have been arrested, found guilty on multiple charges of theft and are currently awaiting on the sentence: http://www.stuff.co.nz/business/money/7083997/Runaway-millio...

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jusben1369• 14 years ago

I would have thought that any laws around checks clearing etc would start or end with a big caveat along the lines of "Assuming there is no known or deliberate attempt to defraud"

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chris-j• 14 years ago

Judging by the numerous sold out shows[1] over the years I bet this fake cheque has actually helped him make a lot more than $95,093.35

[1] http://www.man1bank0.com/dates.cfm

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zalew2• 14 years ago

Heh, a check in 1995 you say. Ok, hear this. This year 2 guys here in Warsaw put a bag full of newspaper into a cash deposit and walked away with 1.5 million Euro on their account. By 'their' account I mean an account set up on a fake or some bum who gave them their ID for a few hundred. Supposedly they had an insider who thought them how to build trust on the account, so after some time the deposits are cashed in before verified. The scammers vanished into thin air, in the meantime cashing out about 1 mil Euro, and the guy putting the bag on the cctv probably turned out to be some other drunkard.

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shin_lao2• 14 years ago

I'm sorry I don't understand the scam. How did they make the cashier believe the newspaper was actually cash?

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mbateman• 14 years ago

ATMs don't scan a deposited check or cash. They wait for someone in the bank to open it and determine whether it is legit, then the account is credited. But after a while your account becomes "trustworthy" and any deposits are credited to the account before it is checked.

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kristaps• 14 years ago

Sorry, sounds completely made up. Have any sources?

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M4v3R• 14 years ago

http://www.tvnwarszawa.pl/informacje,news,pociety-papier-war...

In a nutshell: a guy had setup a corporate bank account, which at this particular bank enabled him to use a "nightly dropbox" in which you declare amount of money, then put it in a bag and put it in the dropbox. These bags are not scanned before your account is credited (I know, it's insane), so guy just withdrawed the money and dissapeared.

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vacri• 14 years ago

I'm surprised that there wasn't some kind of rangecheck for ATM deposits. I can see that you might want to take 5-figure deposits on faith and this could realistically happen, but by the time you get to 6 figures, is an ATM really where you want the deposits to be happening?

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zalew2• 14 years ago

This service is called a 'nightly drop box' or sth, I suppose it's useful f.ex. for for grocery/liquor store owners, I believe a successful branch or two can easily make 6 figures income in a day. This one was actually 7 figures (1m EUR ~~4.5m PLN), around here gas station networks have private security companies to handle the pickups and drops, and I can easily assume a 1hr ride around a few branches (gas stations handle CCs, so there's probably less physical cash while the income is bigger than a liquor) will easily make a few mil, but I don't know if the sad guys drop it nightly in bunches or secure it on their own and transport it to a bank vip area during the day.

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inoop• 14 years ago

I remember a much less spectacular, but related 'hack' that worked here in the Netherlands until it was patched years ago. The trick was to withdraw 125 guilders from your bank account (this was before the euro), which would be presented to you as a f25,- and f100,- note. You could carefully take the f100,- note, but let the f25,- sit in the slot. After a while the ATM would detect that the money had not been taken from the slot, and take the money back. Your bank account statement would show a withdrawal of f125,-, and then a deposit of f125,- shortly after corresponding to the money being taken back by the machine.

Of course, you couldn't do this too often before they caught on to you.

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jorgenhorstink• 14 years ago

In the Netherlands the use of cheques is abolished in 2002. We all use internet banking now, using (at least) two-factor authentication, and we are able to transfer money from and to our current or savings accounts. Transferring money to other bank accounts (paying rent, paying to friends etc.) is also very easy.

Most banks also have mobile applications for smartphones making money transfer even easier. I'm able to transfer money to people I've already sent money to, by just using an iPhone app, and a personal pin code. When I loose my phone, I can just block the app, just like what I'd do when I loose my plastic (credit) bank card.

In Holland we also use iDEAL [1], a nation-wide system for online shopping. It works a little bit like OAuth; I provide the webshop the bank I use, the webshop requests a money transfer, the bank creates a unique transaction, the webshop sends me to the bank, bank requests credentials and processes payment, and sends me back to the webshop proving details about the transaction. This system sounds much more secure to me than the credit card paradigm; only using a credit card number, an expiration date and a 'security code'.

I just don't understand why the USA is still using a method so susceptible to fraud.

[1] http://en.wikipedia.org/wiki/IDEAL

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joshmlewis• 14 years ago

In the US with the major banks you can easily transfer between accounts and other accounts in the same bank easily online. As someone noted this article is from the mid 90s and is a little outdated.

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Bricejm• 14 years ago

I'm surprised that this wasn't considered fraud. Sometimes bank tellers make mistakes, but that shouldn't lead to the bank taking a $95k loss. This guy played a joke on his bank - which would normally be considered illegal, but didn't like that the bank was angry?

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sch1705• 14 years ago

Pretty sure this constitutes fraud. Plus doubt the cheque processing is still carried out as described in the story- doubt any bank today would credit the customer account based on a bogus cheque that couldn't be validated. Surprised this was published in the ft as sounds like an urban myth.

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bluesnowmonkey• 14 years ago

It sounds more like he was hoping to get $95k than that he was playing a practical joke. As if banks have senses of humor. And after the bank and media noticed the situation, he was probably enjoying the attention in addition to holding out hope that he'd still get to keep the money somehow. It's sleazy how he tries to spin it as if he had some moral high ground.

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larrys• 14 years ago

I question this story actually.

Checking the newspapers from that era I find several stories that were all based on the same AP wire story. Here is one (or search news.google.com for others)

http://news.google.com/newspapers?id=2UlWAAAAIBAJ&sjid=G...

http://www.nytimes.com/1995/10/04/us/fake-check-story-ending...

A few things about this.

1) From what can find there is no attempt to verify anything with any bank. I understand that banks aren't going to want to trot out that this happened. But at the very least good reporting (this was also in the NY Times) would require verifying that it actually happened, even with a "no comment" from the bank or the attorney.

2) The type of career he decided to pursue. He wrote a book about "Make College Easier, Beat the System and Get a very cool job".

3) The fake check has a micr on the bottom for the amount. But you don't get cancelled checks with micr, the person who wrote the check does. The photo byline clearly says "Patrick Combs's fake cheque, which arrived as junk mail"

4) The micr says "95,093.55" and the check is for 95,093.35.

5) I haven't checked the routing number but there is no mention of the bank that the check was drawn on.

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mortenjorck• 14 years ago

Why, in August of 2012, is the Financial Times running a piece by Patrick Combs himself rehashing the same story he's been telling for the better part of two decades? I mean, it's a cool story and all, but... The Financial Times?

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webmonkeyuk• 14 years ago

Off the back of this Hacker News post I went to see him perform yesterday evening here at the Edinburgh show.

It was a great and really animated show. I wish I'd just skimmed the FT article though as the first 10 mins were just going over that again!

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