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A Man Walks into a Bank (ft.com)
479 points by jkharness87 on Aug 6, 2012 | hide | past | web | favorite | 175 comments

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.

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.

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

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.

Living in China, I can say that when you deposit, you deposit bills that go through a counter and counterfeit scanner. If any bills don't pass the test, they're separated out and given back to you. You can try to submit again if you wish. It's amazingly efficient and works well. I'm surprised we don't have similar machines in Canada from where I originally hail, especially after the currency revamps.

edit: I have no idea how depositing cheques (checks for you Americans! :D) works here though.

This is true outside the banks as well. If you make any purchase exceeding 250 USD (approximating a purchase requiring 10+ 100RMB bills), chances are the store will have one of these machines.

China is also the only country I've found myself in possession of counterfeit currency. Sigh, I guess I should just take the loss of 100 RMB but I keep thinking a little luck in a taxi could keep the system flowing...

Heck, I get scanned in some restaurants these days for 30RMB meals. :)

Check this reply: http://news.ycombinator.com/item?id=4347383

Basically it wasn't an ATM but a Nightly Drop box that allowed them to declare the amount of money they were depositing.

Ok, I didn't understand that part because the ATM here, in France, actually scan the notes.

You deposit the notes and the machine scans and count everything you deposited and gives you the number. If you agree, your account is credited.

I guess you could design fake notes that pass just the ATM...

Many newer ATMs do this, but there are still some old ones around.

New ATMs, that don't use envelopes, certainly scan the deposit.

Here is few more updates: http://goo.gl/7rw7o

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?

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.

Sorry, sounds completely made up. Have any sources?


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.

>"These bags are not scanned before your account is credited (I know, it's insane)"

It's not insane, it's incredibly efficient. Our whole "system" operates on trust. You can certainly find holes in the system if you so choose.

But don't kid yourself: these losses are built into the profit expectations of banks. And they'll try to catch you. If you want to be on the lam for the rest of your life for a million Euros, have fun.

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).

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.

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.

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).

" Domestic bank transfers are pretty much free for all private people and almost everyone pays all their invoices electronically via their online bank."

In the US, domestic bank transfers cost money (for example, Bank of America charges 3 dollars for ACH and 25 for sending wires; most banks charge 15 for receiving a wire), which explains to a great extent why cheques are still used.

"What's more, credit and debit cards are accepted almost universally" -- credit card fees are onerous

"I think you can get a cashier’s cheque if you really need to" -- did that on Friday. 8 bucks.

Credit card fees aren't onerous, not here in Denmark at least, I think Finland has a similar deal.

Credit cards are issued by your bank, you pay one yearly fee, 175DKK around 30USD. More often than not the bank will give you a VISA debit card for free, or a Master Card with 30.000DKK limit, no interest if you pay the debt of each month (The bank will do the transfer from your account for free, assuming that you have the money of cause).

Paying bills online: Free Domestic bank transfer: Free Credit card / debit card: Free or fixed fee Getting a check made out: Pretty expensive

Oh I meant fees to the recipient, There's a law in the US that requires CC merchants to charge the same price as they would with cash payment (for most goods; some, like gas, have special exemptions), so when you pay X dollars by credit card the merchant receives less than X dollars.

Could you verify that it is indeed a law? I keep on hearing different reports about this: some say that it is a law, some say that it is not a law, just a clause in the contract that the merchant and the CC network agree to.

In the US, there was never such a law. It was a term of credit cards' merchant agreement that merchants couldn't charge extra for credit card use.

However, the recent Dodd-Frank Act limits that - merchants can give a discount for using cash and allows them to set a minimum amount for credit cards up to $10.

Mastercard & Visa v (Merchants) recently settled an antitrust lawsuit regarding this practice.


>The agreement, which provides for a temporary reduction in rates for merchants and allows them to impose surcharges on customer purchases, follows a seven-year legal battle with U.S. retailers that accused the two largest payment networks of conspiring with banks to fix swipe fees, or interchange.

Oh yes, you're right on that part. Denmark have a "Dankort" a national debit card, you can't charge a fee on that, but you could on other cards, but most stores don't.

You can't charge a fee to the customer. But the retailer still has to pay a fee whenever you use any type of credit card.

Which is why I feel like a dick if I ever have to use my credit card for a sub 30kr ($5ish) purchase in a small business.

That fee is usually somewhere between 1.5% and 3% so it is quite steep. Bank transfers though in Sweden are and most of Europe are either free or cheap.

The fees for the person carrying the cards aren't bad but the processing companies, at least here in the US, probably in the EU too since they're all basically the same companies, charge quite a hefty fee on the business end.

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.

Wire transfer and CHIPs both go through the NY Fed system. The banks send requests and money is drawn from or credited to the individual bank's account at the fed.

Here are the specs: http://www.frbservices.org/campaigns/remittance/files/fedwir...

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...

While it's true that the personal cheque account is 100 kinds of dead, they're still used for some businesses. Especially if they're cash-y.

In particular they tend to be used for small businesses, associations and the like because they won't have proper accounting systems set up to track transactions. The cheque stubs form a useful source document for book keepers, accountants and auditors.

Also, a chequeing account can have a requirement for multiple signatures. This matters a lot for partnership-style businesses and of course incorporated and unincorporated associations. Indeed most model constitutions for incorporated associations specifically mention the chequebook, who possesses it and who must sign cheques.

Even so, it's dying out there too. Bank statements have gotten progressively more descriptive as time goes on. Plus the banks are grasping thieving mongrels who use "but it's paper" as an excuse to slug you for stunning fees for every node in the state chart of cheque deposits.

I have cheque books and deposit books for my Pty Ltd accounts and I have never had occasion to use them. I pay bills with the corporate credit card and since I deal with large creditors they prefer to convenience and reliability of direct deposits.

The Commonwealth Bank tried charging for online transfers about six years ago. It caused such a public uproar that they made them free again.

I suspect that it was a bait and switch attempt to phase out branch banking. I.e. make it free until everyone switches over then start charging fees. But it backfired.

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.

I have this problem with paying for Utilities in the States. Both my Electric and Internet allow for auto-pay against my checking account without a fee, but my Natural Gas company uses Western Union for their payment processing, which charge somewhere between a dollar or two per payment as a fee.

The cost of a stamp and the free non-personalized checks from my bank end up being cheaper than paying Western Union every month for the "convenience" of online/electronic payments. My landlord also lives out of state and is an individual, not a large company, so I send her a check every month by snail mail.

You're right, the actual dollar is no big deal, but I continually write their annual survey with remarks about how my Gas Company's online bill pay sucks. I'd rather not pay fee upon fee to do business with a company that feels the need to continually lobby the government for the right to add more fees. Everyone else gets by without having to charge extra for 21st century banking methods.

Does your bank offer an online bill-pay system? Mine does for free, and if they can't deliver the money electronically they cut and mail a check for you.

The banks I use do offer this. I call it "electronic on at least one side" because it appears like an electronic payment for me, even if it's old-school on the other end.

It works fine for the "paying utility" case (or "mailing combined rent check"), but it feels kind of silly when it's for transferring money to my roommate who lives 20 feet away.

This is the big problem with acquiring bitcoin right now, of course once you have it, transactions are very cheap.

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.

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.

Sure, but then someone can mug you. Credit cards and checks you can cancel.

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.

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.

> 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...

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

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

Do you have a better solution? Also, many banks now allow cashing photos of checks.

Yes, other countries do have better solutions at present.

In the UK for example, they've just introduced FPS for all small transfers (around £0-£100000, varies with the bank) - this transfers money almost instantaneously between two bank accounts, is low risk as it uses the existing electronic transfer systems, and is free to use. This suits the customers as it is free and very quick (usually within seconds), and suits the banks as they don't have to keep all of that pointless paper around, process cheques, verify signatures etc etc.

There's talk of getting rid of cheques sometime in the next decade in the UK, because hardly anyone uses them any more, I think the first date proposed was 2018 though they've now put it off for a bit.

> Do you have a better solution?

I don't personally, but there's lots of accounts in these comments about systems in other countries that have free or nearly free near-instant wire transfers provided bank account number and name. Charities soliciting donations include their account number in ads. If you don't have a bank account you can make a deposit into the account at the post office. It doesn't get much simpler.

> Also, many banks now allow cashing photos of checks.

Yeah, but until you can "sign" an image of a cheque and email it to the recipient - and I'm not sure if that'd be technically a valid legal cheque in the U.S. - a physical copy must exist at some point.

> I don't personally, but there's lots of accounts in these comments about systems in other countries that have free or nearly free near-instant wire transfers provided bank account number and name. Charities soliciting donations include their account number in ads.

This is currently expensive with american banks because use of checks is so wide spread - that might work.

> If you don't have a bank account you can make a deposit into the account at the post office. It doesn't get much simpler.

I guess.... and yet, I prefer checks for A) having something physical to document, B) being able to give people non-cash physical money. I guess something like a cashiers check would also serve this purpose, and C) avoid using online banking software, which is atrocious. I can't use more than 10 characters per password, and my default one is 26 characters. I don't trust billion dollar companies with securing my banking information. If people want to take my money, they'll have to make an effort and go through my trash.

You don't trust your bank's online systems, but you trust them to properly verify that cheques drawn against your account are valid?

Yes, I do. Checks are a more tried and true technology, for one, and check verification is a relatively open technology; we know it's weaknesses. On the other hand, there is no guarantee passwords are even hashed, that backend communication is encrypted, that the horrendous security questions allow easy access to anyone who knows my mother's maiden name (which is a matter of public record). Finally, I can chargeback/cancel/reverse checks, which require a physical item, but though the web interface I can initialize a on-reversable wire transfer.

So I do trust cheques more, and I have more options if a bad check is charged.

I'm not sure a physical copy actually has to exist anymore, with the Check21 regulation a digitized copy containing the relevant information is considered to be the same thing as a physical check. I don't think there's anything in the regulation that would prohibit a consumer from creating the digitized version themselves. Now getting a bank to accept it from an untrusted source (a customer) as opposed from another bank might be hard.

Hm... this isn't very scientific, but I've read through a bunch of Wikipedia articles on the topic and nothing says explicitly this will be possible. Everything appears to be written under the assumption that a physical check exists to begin the process, and the article on substitute checks [2] explicitly refers to a "digital reproduction of an original paper check." Maybe someone who knows the actual regulation can chime in.

[1] http://en.wikipedia.org/wiki/Check_21, http://en.wikipedia.org/wiki/Remote_deposit, http://en.wikipedia.org/wiki/Cheque_truncation [2] http://en.wikipedia.org/wiki/Substitute_check

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.

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.

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.

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.

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

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

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.

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

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)



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.

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.

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.

The banking crisis has made it topical again.

He probably needs the money

Has it been 17 years since 1995? OH MY

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

He wants HN karma.

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?

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.

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."


A friend of mine had $3m stolen by his business partner who simply wrote out $500k cheques and took them to the bank. The bank oked the cheques despite knowing that he had no signing authority.

Once it all came to light, the bank then sued my friend and drove him into bankruptcy.

Fuck banks

Wouldn't you be able to sue the business partner for that sort of behavior?

Muc cheaper to get the money back from the bank and let them sue him. It was their mistake and they have lawyers fur such things.

Actually... the other article that three14 linked to enumerates the reasons here: http://www.goodthink.com/writing/view_stories.cfm?id=11&...


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."

    > 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."
But he did deposit the check with the thought that it would cash. He wouldn't have done it otherwise, since it wouldn't have been funny.

No, he said that he thought there was no chance it would clear. He said that he imagined the phone call from the bank to tell him that the cheque was nonsense.

I don't know if that's enough to avoid fraud.

In England he'd have to pay back the cash, and any interest earned on the cash, and he'd have to have good lawyers to get off any criminal charges. I think; IANAL etc.

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

How would that process work?

Check gets deposited in ABC bank (issued by XYZ bank). ABC bank sends a scan of the check to XYZ bank. And XYZ bank has an employee whose job it is to look at every inbound check to make sure the signature matches? Or maybe they have computers to recognize the signature and compare them for similarities. If it's too different, then it's flagged and sent to an employee for further review?

I suppose it's possible that this happens. I honestly have no idea. Next time you write a check, sign it "Snoopy" and see if it still clears. My guess is that it would.

> Or maybe they have computers to recognize the signature and compare them for similarities. If it's too different, then it's flagged and sent to an employee for further review?

Yeah, that'd be nice, and I think it's well within the grasp of the big banks to deploy some image recognition software to do this, and yet I'm fairly certain they do not. Anecdata to follow...

I recently had a blank check stolen from me and filled out with a completely fake looking signature, it was really almost cartoonish. Yet the bank (Chase) did nothing to stop this from being deposited by the thief, and debiting my account. I only found out a month or so later, and filed a dispute, which they resolved. But the only reason I noticed it was that I don't use checks very often, so even though the amount was not an outrageous sum, it stood out. The bank's suggestion to me, for the future, was to NOT USE CHECKS. Ever. The low level employees at the local branch, when I was there closing the account and opening a new one, told me NOT to order checks at all, and pay rent with a direct transfer or bill-pay feature.

This is what people mean when they say the only innovation in consumer level banking is improvements to ATMs.

The thing with doing that it it requires the person signing the check to have a /single/ extremely consistent signature. Personally my signature changes a lot depending on the pen I'm using or even how quickly I go. And I doubt I'm the only one.

Bill-pay features are a pretty good innovation, I'd say.

Fair enough I suppose, and I'd add the rest of online banking is a big improvement too.

The fact that checks are not anywhere near as secure as I would want (or apparently the bank's own tellers would want) just irks me, since they're much more convenient than bill-pay, which takes 5 business days to process while handing a check to my landlord takes less than 1.

I used to sign checks as Nickname Lastname, rather than my given name. I eventually had one bounce due to "signature not as drawn". I do have very legible handwriting though.

I would but I live in a country where cheques are considered archaic.

I'm 99% sure signatures only come into play in the event of a dispute.

They definitely don't check the signature. About a year ago, I altered the way I sign cheques. I used to sign my full name, now I just initials them. I got not problem, no cheque bounced.

Only you can define what your signature looks like. That is why you didn't have any issues. They don't check the signature against anything, if that's what you mean. See this comment: http://news.ycombinator.com/item?id=4345214

A few years ago, I was going through the process of changing my name. I was endorsing checks with my new name and depositing them into accounts with my old name -- a completely different name, and still no problems! I imagine this happens fairly often with newly-wed women.

Also, the signature on my current driver's license is a squiggly line.

> Only you can define what your signature looks like. That is why you didn't have any issues. They don't check the signature against anything, if that's what you mean. See this comment: http://news.ycombinator.com/item?id=4345214

This may be mostly true, or even universally true now, but it hasn't always been. I remember trying to make some major modification on an account with a local bank in Chicago around 2000 --maybe closing it?-- and the bank officer with whom I dealt actually brought out a physical record of my signature to compare against what I was currently signing. (Since I'd opened the account some years ago, it took me a long time to guess how I'd signed back then and to reproduce it successfully. For some reason, the officer was perfectly willing to let me try until I satisfied her, but not to accept that I was who my ID said I was.)

I deposited a check at an ATM recently and it was rejected (by the ATM itself) because it was not endorsed. It wasn't and I seriously doubt this is anything more than a check for some ink on the back in the endorse-here area.

The ATM then tried to return the check to me, but there was some kind of paper feed error and I never saw it again.

Same thing with credit cards. Most vendors don't event check if you signature matches the signature that is on the back of the card. (not that it proves ownership.)

It's too bad there isn't some sort of reconfigurable QR code stamp thing that you can use to sign something. Say, for example, you enter in the payee, amount and date, it digitally signs it with your private key from your bank, creates a QR code with the data and moves tiny little stamp pins up/down and you press it onto the paper.

If you're going through that much technological effort, why still use paper cheques?

Because it doesn't require the other person to use anything technological.

Other than a bank or cheque cashing service, anyway...

The niche seems pretty small: payments too large for cash, too small for certified bank drafts, to people taking too few payments to have technologying up make sense.

I think that's kind of the problem: making it easy enough for people to use modern cryptography to electronically send money to someone quickly.

I believe that in the original write-up of this story, which spanned several pages, the author mentioned that he didn't even bother to endorse the check he'd deposited.

In the posted article, he mentions endorsing it with a smiley face.

Not sure about all

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.

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.

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....

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.

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

Going to jail for fraud is disincentive enough for most.

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.

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.

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.

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?

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.

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.

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.

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.


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?

Legend has it some students in the UK banked a cow

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

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.

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".


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.

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


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

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.

Pretty hard to believe a check that size held up a bank merger.

he didn't apologize, the bank did. that was the whole point of him cashing $95k and holding it until the bank acknowledged that they screwed up.

sorry, should have clarified: I meant the bank was the one with the token apology, not the guy who deposited the check.

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.

You're talking about on his website, from 1995, in which yes he made it clear from the beginning, and he also offered the entire story through to the end for free.

We're talking about the article on FT.com (this actual submission) where there is nothing up front about it, and where, without finishing his story, he ends with the fact that he's telling the story live and how if you pay to see him you can find out the end of the story.

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

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.

Is the cookie warning normal? European laws applied?

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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...

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.

"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.

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.

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.

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.

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).

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.

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.

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.

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

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?

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?

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.

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.

Knowingly using a forged bill is illegal.

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?

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

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

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

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

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

Well, it does, but they've chosen to monetize it. I can transfer money to anyone with an account, but I have to pay $25 if I want it done today and $3 if I want it done some time next week.

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

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.

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.

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...

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...

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...

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.

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?

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!

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

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"

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.

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


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

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

There was a link to the same story afaik last year

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

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


Now that I have read the full story, your memory is at fault, and that is not a fair or reasonable summary.

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