TomCollins
08-08-2005, 05:29 PM
I had a bit of fun a few months ago buying a house, and with the Nigerian Scam Idiot now posting, the fact that most people think that a check clearing and a check being funded are the same thing is the entire reason these scams propogate.
My Story:
Last year, I won a tournament at Foxwoods for about 20k. I didn't want to carry the cash with me, and had limited time, so I ended up opening an account. The banker had me deposit into 2 accounts, a checking account, with a minimum balance of $50, and the rest in a money market account. I was planning on keeping the accounts for 30 days or so, and moving the money to my normal bank account. However, I was getting a better interest rate on the MM account, so decided to just leave things until I needed the money.
Fast forward to earlier this year, when I decide to buy a house. I need a down payment, so I need to get a cashier's check. The bank in Rhode Island wouldn't send me a cashiers check without jumping through hoops, so I decided to transfer the money from the MM account to the checking account, and write myself a check. I got about 200 checks in the mail from these accounts, and hadn't used one. So I move all the money to the Checking Account, write myself a check, deposit it at my bank, and about 3 days later, the money appears in my account. About 3 days later, the money is taken out of my checking account. A week later, I get a letter saying the check was returned NSF. I call both my banks to figure out what happened, and the bank in RI says that sometimes it takes a day or two to move money between accounts if I do it on the phone, and I might have been short. So I write another check, deposit it. Check clears, money appears, 3 days later, money gone. I call the bank immediately, they say NSF return. I write ANOTHER check (my closing is now 2 weeks away, and I don't have time to mess around with this). I carefully get the exact balance of my account, and try once more. I deposit the check. I call and speak to someone at my RI bank, and I finally realize that I had checks written from my MM account, not my Checking account. But I dropped off a check in my ATM, and knew it would bounce. I tried to get the teller to move the funds back to my MM account. She was not optimistic it could be done in time. I notified my own bank that the check I deposited was not going to make funds, and that if there was any way to wait a few days or revoke the check, do it. They said there was no way to do this.
As planned, the check cleared, and funds were added to my account. I needed a cashiers check the next week, and knew I wouldn't have time to write another check, have another round of bouncing. I went to the bank to get a cashiers check, spoke with the banker. He told me that the check had cleared and I could withdrawl the money if I wanted. I told him I was sure the check would not be funded. He said it wouldn't matter, I could take the money. So I did. I deposited another check the next day. The original check was not funded, my account dropped to a negative balance.
I don't consider myself to be stupid (writing a check from the wrong account may have been a bit stupid, I didn't think to try to match up the account numbers on the bottom of the check, and didn't realize MM accounts could even HAVE checks). But its possible to misunderstand how the banking system works. And that makes it possible for these types of scams to work. Even those who try to check to see if a check "clears" don't quite understand what that means.
The banking industry has been quite pitiful at helping protect consumers against fraud. Identity theft issues are a completely new thing that are nearly impossible to clear up. Fees on anything under the sun are also making the banking industry. If you didn't hear about the Nigerian scams such as these, its very easy to fall for them, especially some of the more elaborate ones that take advantage of the ignorance of the inner workings of the banking industry.
My Story:
Last year, I won a tournament at Foxwoods for about 20k. I didn't want to carry the cash with me, and had limited time, so I ended up opening an account. The banker had me deposit into 2 accounts, a checking account, with a minimum balance of $50, and the rest in a money market account. I was planning on keeping the accounts for 30 days or so, and moving the money to my normal bank account. However, I was getting a better interest rate on the MM account, so decided to just leave things until I needed the money.
Fast forward to earlier this year, when I decide to buy a house. I need a down payment, so I need to get a cashier's check. The bank in Rhode Island wouldn't send me a cashiers check without jumping through hoops, so I decided to transfer the money from the MM account to the checking account, and write myself a check. I got about 200 checks in the mail from these accounts, and hadn't used one. So I move all the money to the Checking Account, write myself a check, deposit it at my bank, and about 3 days later, the money appears in my account. About 3 days later, the money is taken out of my checking account. A week later, I get a letter saying the check was returned NSF. I call both my banks to figure out what happened, and the bank in RI says that sometimes it takes a day or two to move money between accounts if I do it on the phone, and I might have been short. So I write another check, deposit it. Check clears, money appears, 3 days later, money gone. I call the bank immediately, they say NSF return. I write ANOTHER check (my closing is now 2 weeks away, and I don't have time to mess around with this). I carefully get the exact balance of my account, and try once more. I deposit the check. I call and speak to someone at my RI bank, and I finally realize that I had checks written from my MM account, not my Checking account. But I dropped off a check in my ATM, and knew it would bounce. I tried to get the teller to move the funds back to my MM account. She was not optimistic it could be done in time. I notified my own bank that the check I deposited was not going to make funds, and that if there was any way to wait a few days or revoke the check, do it. They said there was no way to do this.
As planned, the check cleared, and funds were added to my account. I needed a cashiers check the next week, and knew I wouldn't have time to write another check, have another round of bouncing. I went to the bank to get a cashiers check, spoke with the banker. He told me that the check had cleared and I could withdrawl the money if I wanted. I told him I was sure the check would not be funded. He said it wouldn't matter, I could take the money. So I did. I deposited another check the next day. The original check was not funded, my account dropped to a negative balance.
I don't consider myself to be stupid (writing a check from the wrong account may have been a bit stupid, I didn't think to try to match up the account numbers on the bottom of the check, and didn't realize MM accounts could even HAVE checks). But its possible to misunderstand how the banking system works. And that makes it possible for these types of scams to work. Even those who try to check to see if a check "clears" don't quite understand what that means.
The banking industry has been quite pitiful at helping protect consumers against fraud. Identity theft issues are a completely new thing that are nearly impossible to clear up. Fees on anything under the sun are also making the banking industry. If you didn't hear about the Nigerian scams such as these, its very easy to fall for them, especially some of the more elaborate ones that take advantage of the ignorance of the inner workings of the banking industry.