I just read the “Is this a scam?” thread in IMHO (and, of course, you know it is, before even opening the thread), and it occurs to me that the banking industry is falling way behind the fraudsters in declaring the state of money clearly and obviously.
For example, if you go to your bank and deposit a check, your account balance is generally credite immediately. Now, everybody knows that if the check bounces or is fradulent, you don’t really have the money. You have to wait until the check clears.
Except that apparently a check can be returned as fradulent even after it “clears”. Anecdotal evidence suggests that not even the bank employees are clear on this point; if you ask them if the money is absolutely, definitely, assuredly yours, they will answer “yes”… until it isn’t. I don’t have a whole lot of sympathy for idiots who send their life savings off to Africa based on a poorly-spelled email, but when someone gets ripped off because their bank claims that a check “cleared” and that the money was as good as gold, that’s a serious failure on the part of the banking industry.
I’m sure that there’s some really awesome antiquated reason why banks use the word “cleared” to mean “an arbitrary amount of time that doesn’t appear to actually offer any security against fraud”, but it’s time to change the system. I propose that account balances should have two values listed, one that is the estimated balance, based on any transactions pending absolute completion, and one that is, absolutely, necessarily, and with the full force of law, your money. After the check from Prince Nahi Imbatumke goes to that last column, it doesn’t matter if it’s later discovered as a fraud; it’s not your problem.
Since “cleared” isn’t strong enough, we can come up with some other term to mean “incapable of being retracted”. I like the idea of “closed”.
I’m not sure there is such a thing as “incapable of being retracted”. I’ve heard of the money being taken back months after the deposited check was processed and the funds left the payor’s account.
Interestingly (especially after commenting in the previous thread), the UK’s central cheque clearance service is upfront about this potential for fraud:
Unfortunately, their advice on avoiding being a victim to such a fraud can be summed up as “don’t accept dodgy cheques”. Great. http://www.apacs.org.uk/payments_industry/payment_fraud_2a.html
What’s worth noting is that they’re not afraid to use the term ‘cleared’. It seems to mean nothing more than ‘has passed through the clearing system’.
According to that story about the guy who jokingly deposited the fake $100K check he got as part of a promotion, the law was either 30 or 60 days in the US, IIRC.
That may only effect legitimate checks (which, it turns out, the joke check was), and not fraudulent ones, though. If it doesn’t, well, maybe we should change the law.
My guess is that there’d be strong opposition to changes in the law, from the banking industry, on the grounds that it would further encourage an already-prevalent form of fraud, and makes them liable for something that they have no part in.
But the examples I’ve read about have the cheque drawn on a bank in another country than the one the depositor is in. The cheque enters the clearing system, is declared clear, then finally bounces when it reaches some bank in East Yak Breath, Mongolia. It seems to me that the cheque clearing system declares the clearing process complete (after a certain number of months?), even if it hasn’t actually truly completed. I’m not sure whether that reflects some requirement such as “all payment transactions must be completed within sixty days of their starting,” or something like that.