Friday, May 20, 2005
FYI :: Fraud and your Checking Account.
Although this isn't SO much tech related, those of you dealing with ACH, E-Commerce, Electronic Payments and the like may find this to be quite interesting. (as syndicated from my personal blog @ http://shrive.blogspot.com)
Okay so I'm a software developer. For some strange reason, my job has led me down a path where I have been exposed to quite a bit of fraud. Well I guess it's not really all that strange considering I work for a Telecom and telecom service is the 2nd most fraudulently purchased service on the planet. And thats second to porn, seriously.
So when I thought I had seen it all, today I caught wind of yet ANOTHER way you can be scammed. So businesses and even individuals, watch your ASS.
Here's what happened here. We allow sales reps to sell our cellular Telecom services for resale in retail locations across the country, we have 1000's. What happens is we then pay these retailers a percentage commission by mailing them a check to their address.
So each month we send out over a few thousand commission checks... in sequence. So for example, if we are sending out 3255 checks, it would be something like check #1000 - #4255.
The Problem:
What happened was these guys knew our commission pay out was at the end of each month. They would get their check, lets say check #1305. They would then call OUR bank and request "check by phone". What they would do (knowing the banking system makes you use check numbers in sequence) is call the bank and say "I need to do a check transfer by phone for check #1211". They use numbers in the sequence PREVIOUS to theres for obvious reasons. They would then say, "its for the amount of $500." So now these guys have hit a check for $500 when the actual paper check that was mailed to Jon Doe was for $43.50. But when Jon Doe goes to cash that check, the bank will say "oops sorry, this check has already been cashed. Jon Doe gets shafted for his commission and RacerX fraud boy walks with his $500 and whatever else other numbers he has processed.
So how could they get away with this? How could they not be verified by the bank with this check by phone service by my bank? Well, unfortunately, you can thank the beautious bureaucratic bullshit our banks have created because this for someone to transfer a check by phone, its not 100% fool proof. Meaning that depending on the operator and the bank that handles it, they may or may not validate and verify the person placing the request. So its as easy as me calling in with one of YOUR check numbers, with your account and routing number and requesting the transfer. The transaction normally goes something like this (according to our accountant here and another accountant I've spoken with regarding this):
RacerX: "yes id like to transfer a check by phone"
Bank Operator: "sure, whats your name?"
RacerX: "Joe smith"
Bank Operator: "whats your company name?" *keep in mind this is PRINTED on th actual check
RacerX: "ABC Telecom" ;)
Bank Operator: "Whats the check number, routing and account number and amount please?"
RacerX: "check number 1211, routing 123456789, account number 132903, amount $500"
Bank Operator: "Thank you and have a great day"
JUST........LIKE............THAT.
The Possible Solution?
Well, I think there could be a few. A few could be simple, others may not be however:
Okay so I'm a software developer. For some strange reason, my job has led me down a path where I have been exposed to quite a bit of fraud. Well I guess it's not really all that strange considering I work for a Telecom and telecom service is the 2nd most fraudulently purchased service on the planet. And thats second to porn, seriously.
So when I thought I had seen it all, today I caught wind of yet ANOTHER way you can be scammed. So businesses and even individuals, watch your ASS.
Here's what happened here. We allow sales reps to sell our cellular Telecom services for resale in retail locations across the country, we have 1000's. What happens is we then pay these retailers a percentage commission by mailing them a check to their address.
So each month we send out over a few thousand commission checks... in sequence. So for example, if we are sending out 3255 checks, it would be something like check #1000 - #4255.
The Problem:
What happened was these guys knew our commission pay out was at the end of each month. They would get their check, lets say check #1305. They would then call OUR bank and request "check by phone". What they would do (knowing the banking system makes you use check numbers in sequence) is call the bank and say "I need to do a check transfer by phone for check #1211". They use numbers in the sequence PREVIOUS to theres for obvious reasons. They would then say, "its for the amount of $500." So now these guys have hit a check for $500 when the actual paper check that was mailed to Jon Doe was for $43.50. But when Jon Doe goes to cash that check, the bank will say "oops sorry, this check has already been cashed. Jon Doe gets shafted for his commission and RacerX fraud boy walks with his $500 and whatever else other numbers he has processed.
So how could they get away with this? How could they not be verified by the bank with this check by phone service by my bank? Well, unfortunately, you can thank the beautious bureaucratic bullshit our banks have created because this for someone to transfer a check by phone, its not 100% fool proof. Meaning that depending on the operator and the bank that handles it, they may or may not validate and verify the person placing the request. So its as easy as me calling in with one of YOUR check numbers, with your account and routing number and requesting the transfer. The transaction normally goes something like this (according to our accountant here and another accountant I've spoken with regarding this):
RacerX: "yes id like to transfer a check by phone"
Bank Operator: "sure, whats your name?"
RacerX: "Joe smith"
Bank Operator: "whats your company name?" *keep in mind this is PRINTED on th actual check
RacerX: "ABC Telecom" ;)
Bank Operator: "Whats the check number, routing and account number and amount please?"
RacerX: "check number 1211, routing 123456789, account number 132903, amount $500"
Bank Operator: "Thank you and have a great day"
JUST........LIKE............THAT.
The Possible Solution?
Well, I think there could be a few. A few could be simple, others may not be however:
- Use ACH (Automated Clearing House) services. There are no checks or more importantly, check #'s used in this process. A request is placed electronically (eliminating human error and fraud by phone) and the money is transferred after approval from BOTH parties. This seems to be the simplest way. HOWEVER, it does require you to WATCH YOUR BOOKS. Hopefully you have a competent accountant or a good wife to keep an eye on the money for you. But if you had that, you wouldn't be in this situation in the first place now would you?
- Random check#'s. The whole problem here is that these guys can pick up the account number, routing number and business name RIGHT off the check. They can also pick check numbers previous to theres to attempt to cash. If the check numbers in a business's check book or stack are random, there is no defined sequence. This makes it MUCH harder and less desirable for these guys to try to get into your account. However, this would involve the entire United states banking system and our Federal Reserve to change their processing system. Fat, and I mean FAT chance. We are talking about a system that still runs purely on position based database systems. No chance of change coming anytime soon.
- The solution we employed here at our Telecom is a service our bank offered (for a nominal fee of course). Each morning, our book keeper recieves a report by fax that shows ALL checks being cashed. He then must check off which checks he approves and does not approve before they complete the transaction. Now this requires him to actually compare each check against his books. A pain? Yes very much so. But not nearly the pain of a $100,000 kick in the pants from RacerX.
- Create an empty account. Create an account that you transfer ONLY the total amount of checks to be cashed. Be careful though, if you aren't good with your books and you dont transfer enough, you could be dealing with bounced checks and fees. This involves a LITTLE hard work, but could prove to be more useful for smaller businesses and individuals. This protects you from getting hit with LARGER amounts. But if you're processing LARGE amounts of checks and dollar amounts, its not as beneficial nor efficient to do.
I guess what it all comes down to, is that you cannot depend on the bank to be 100% secure for you. You have to do a certain amount of reconciling and detective work on your own to make sure you aren't nailed. Now I'm not trying to make you paranoid or cast a cloud of doom and gloom, I'm telling you this with the hope of putting the thought in the back of your mind that you cannot just assume the bank has your best interest in mind. So be mindful, reconcile your books and keep an eye on your bottom line. If you don't you could be getting taken under the radar without realizing it.
Comments:
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Wow. Good advice there. I had no idea that it was so easy to pull that crap.
Once again, the government institutions that we depend on are exposed for the lazy asses that they are.
Good thing our Homeland Security is all over the whole terrorist thing. While they watch the borders looking out, any number of them could be sitting right here, leaching off our lame excuse for a financial system to fund themselves and buy expensive shit before they make someone else suffer.
Once again, the government institutions that we depend on are exposed for the lazy asses that they are.
Good thing our Homeland Security is all over the whole terrorist thing. While they watch the borders looking out, any number of them could be sitting right here, leaching off our lame excuse for a financial system to fund themselves and buy expensive shit before they make someone else suffer.
its not just the gov't that sucks here. the biggest whole in this situation is the bank. banks are not government owned.
now the federal reserve is. and true, it IS running on an archaic system (to say the least), but Ill bet you anything if they were to say "yes we are going to upgrade the federal reserve system and its going to cost us 3 trillion" you'd be the first to bitch and complain because your taxes had to go up as a result.
a perfect example is the whole terrorist/airport thing. it cracks me up, because of all the airline security you have these 1 and 2 hour waits to board because the baggage checks are now so thorough.. .yet you hear people bitch and complain because of the long lines. but let a terrorist through and let them take a few planes into some more buildings and guess who catches the blame.
beh screw it. i dont care. all of the shit is screwed up. even bush with his bullshit "i dont believe in vigilantiism" if thats even a fucking word. Our security sucks at the borders and people are willing to donate their time to help keep a watch on their country because our govt border patrol sucks a mules dirty cock, yet our govt says "we arent fans of that..."
man screw it all. i say they are doing what they can to cover their asses to an extent and they can fuck off. i have no clue what im talking about anymore.
eat asses.
now the federal reserve is. and true, it IS running on an archaic system (to say the least), but Ill bet you anything if they were to say "yes we are going to upgrade the federal reserve system and its going to cost us 3 trillion" you'd be the first to bitch and complain because your taxes had to go up as a result.
a perfect example is the whole terrorist/airport thing. it cracks me up, because of all the airline security you have these 1 and 2 hour waits to board because the baggage checks are now so thorough.. .yet you hear people bitch and complain because of the long lines. but let a terrorist through and let them take a few planes into some more buildings and guess who catches the blame.
beh screw it. i dont care. all of the shit is screwed up. even bush with his bullshit "i dont believe in vigilantiism" if thats even a fucking word. Our security sucks at the borders and people are willing to donate their time to help keep a watch on their country because our govt border patrol sucks a mules dirty cock, yet our govt says "we arent fans of that..."
man screw it all. i say they are doing what they can to cover their asses to an extent and they can fuck off. i have no clue what im talking about anymore.
eat asses.
I think you pretty much hit on what I was trying to say, and you're right: it's not jsut the government. Everyone is only doing the amount it takes to cover their asses, and nothing more. There's that whole reactionary thing.
So Bush won't support vigilantes, but this country never did, and publicly saying "sure, kill anyone you suspect of terrorism" would open a whole new can of worms. Plus I'd be buying a gun. Heh.
Also, if the Reserve was to be upgraded, it should be done with funds that are already in circulation. There's no need to charge the public even MORE because the government didn't keep up with the times. More importantly, and almost as alarming, yet hardly a surprise, is the fact that there are numerous watchdog groups and committees that get boku bucks to keep on top of things like this, and instead, they just sit back in their cushy chairs, continuing to suck off the money teat, doing only what's needed to keep attention off of them.
Gone are the days where the people actually had any say about what our "duly elected" officials are doing with the power and money we have so graciously given them. Maybe if they had to check with US to get the approval for some bullshit bill, instead of their buddies in Congress and the Senate, things might just get turned around for the better. Then again, with the current TV generation that has been reared, I have to admit that there probably wouldn't be any good changes made under that system.
I'm still getting a gun though.
So Bush won't support vigilantes, but this country never did, and publicly saying "sure, kill anyone you suspect of terrorism" would open a whole new can of worms. Plus I'd be buying a gun. Heh.
Also, if the Reserve was to be upgraded, it should be done with funds that are already in circulation. There's no need to charge the public even MORE because the government didn't keep up with the times. More importantly, and almost as alarming, yet hardly a surprise, is the fact that there are numerous watchdog groups and committees that get boku bucks to keep on top of things like this, and instead, they just sit back in their cushy chairs, continuing to suck off the money teat, doing only what's needed to keep attention off of them.
Gone are the days where the people actually had any say about what our "duly elected" officials are doing with the power and money we have so graciously given them. Maybe if they had to check with US to get the approval for some bullshit bill, instead of their buddies in Congress and the Senate, things might just get turned around for the better. Then again, with the current TV generation that has been reared, I have to admit that there probably wouldn't be any good changes made under that system.
I'm still getting a gun though.
"it should be done with funds that are already in circulation."
BAHAHHAHA where the shit do you think that money comes from dude? Yeah there is just money floating around out there that the federal reserve is just gonna grab out of thin air. Give me a break. Yeah because money is just *out there* in "circulation". It just...is.
In regard to the "elected officials", if you don't like what they are doing, then do your part and vote for what you believe in. If the rest of the country thinks otherwise, then too bad for you. But this is what democracy is all about. If you don't like it, move to Canada.... yeah you know.. .the place where "health care is free" yet everyone around the world comes to OUR hospitals to see OUR doctors because we have world class expertise...
kinda went off on a tangent there...sorry.
BAHAHHAHA where the shit do you think that money comes from dude? Yeah there is just money floating around out there that the federal reserve is just gonna grab out of thin air. Give me a break. Yeah because money is just *out there* in "circulation". It just...is.
In regard to the "elected officials", if you don't like what they are doing, then do your part and vote for what you believe in. If the rest of the country thinks otherwise, then too bad for you. But this is what democracy is all about. If you don't like it, move to Canada.... yeah you know.. .the place where "health care is free" yet everyone around the world comes to OUR hospitals to see OUR doctors because we have world class expertise...
kinda went off on a tangent there...sorry.
Actually, what I meant by "in circulation" was the money that has already been earmarked for things like this, but are held back in case "something better" arises instead.
There is tons of money that isn't being used, but is claimed as spent anyway so that the government doesn't have to worry about its budget being forcibly shrunk. Instead, it's more convenient for them to re-tool the budget and "oh look at all this money we could save HERE!". Did you know that billions were spent on military research into anti-gravity systems, only to have the results come back as "Not Currently Possible". So all that money was spent so some people could crunch numbers and produce no results. Do we NEED anti-gravity right now? What about the $2 BILLION spent on the X-Plane project? $2 Billion just to develop a stupid fighter plane, that is likely to be used more in other countries than it is in our own military. Nice.
As it is, there's a shitload of funds that could be redirected to revamping the nation's financial structure. What needs to happen is that first, there needs to be a standardized technological base. For example, look at this new tech around touchless credit cards. Nice concept, and there are already twelve different methods, none of which are compatible.
How much money was spent on all of this? I'll bet you could take that money and easily fund a single standard, PLUS get a TON of the needed equipment distributed. Instead, thanks to capatilism, all these companies are competing with the same thing, and generally causing a clusterfrack.
I DID vote this last election period, but my voice didn't count. It made not one bit of difference when the person I wasn't voting for had more money to spend on advertising. There comes a time when one must realize that trying to drive the opposite direction from everyone else just gets you really banged up. It doesn't change anything to try to make a difference anymore, and if you say something different from the rest of the herd, you are singled out and ridiculed for it. Elections these days are a joke, and the only people who truly have any power are the ones who have control over huge sums of money.
Knowing that makes me suspect that perhaps our system is so outdated because some powerful folks need it to stay that way in order to keep their money coming in.
Voting someone in or out of office isn't going to chance how the government-at-large is doing things. Not one of the Presidents we've had in office these last few terms have made any radical, POSITIVE changes to the way our government works and keeps ITSELF in check. Wonderful.
There is tons of money that isn't being used, but is claimed as spent anyway so that the government doesn't have to worry about its budget being forcibly shrunk. Instead, it's more convenient for them to re-tool the budget and "oh look at all this money we could save HERE!". Did you know that billions were spent on military research into anti-gravity systems, only to have the results come back as "Not Currently Possible". So all that money was spent so some people could crunch numbers and produce no results. Do we NEED anti-gravity right now? What about the $2 BILLION spent on the X-Plane project? $2 Billion just to develop a stupid fighter plane, that is likely to be used more in other countries than it is in our own military. Nice.
As it is, there's a shitload of funds that could be redirected to revamping the nation's financial structure. What needs to happen is that first, there needs to be a standardized technological base. For example, look at this new tech around touchless credit cards. Nice concept, and there are already twelve different methods, none of which are compatible.
How much money was spent on all of this? I'll bet you could take that money and easily fund a single standard, PLUS get a TON of the needed equipment distributed. Instead, thanks to capatilism, all these companies are competing with the same thing, and generally causing a clusterfrack.
I DID vote this last election period, but my voice didn't count. It made not one bit of difference when the person I wasn't voting for had more money to spend on advertising. There comes a time when one must realize that trying to drive the opposite direction from everyone else just gets you really banged up. It doesn't change anything to try to make a difference anymore, and if you say something different from the rest of the herd, you are singled out and ridiculed for it. Elections these days are a joke, and the only people who truly have any power are the ones who have control over huge sums of money.
Knowing that makes me suspect that perhaps our system is so outdated because some powerful folks need it to stay that way in order to keep their money coming in.
Voting someone in or out of office isn't going to chance how the government-at-large is doing things. Not one of the Presidents we've had in office these last few terms have made any radical, POSITIVE changes to the way our government works and keeps ITSELF in check. Wonderful.
bah forget it... we could go on for days...
How about $6 Trillion spent on the war on poverty from the great society "Johnson" late sixties. Basically no change in poverty rate in this country. Proof that tossing money at untrained and dependant class of people does not work in resolving poverty. Changing environmental pressures does.
Remember the US Constitution states that the Gov't "Has the Responsibility" to protect and defend it's people, so any military spending is actually protected by the Constitution. While Anti Gravity would be an awesome advancement in science and technology, I'd like to see the actual budget and how many years were invested. Also, I'm sure that NASA, mass transportation, and the rest of the world would benefit greatly if it could be accomplished. But if you are correct on the spending, lets just compare one item to another: $2 billion for scientific research vs. $6 Trillion wasted on trying to fix poverty by throwing away money... which was the biggest waste of TAX PAYER MONEY?
And as far as you "not having a voice", elections these days ARENT a joke. What is a joke are the people who bitch and complain about the person elected into office and dont do anything about it. If you REALLY didn't want bush into office and you REALLY wanted to do something about it, then you could have assembled an organization to work at pushing the opposition. It's a free country, you have that right. Without a doubt, youll say "yeah right, how am I supposed to do that?" Don't ask me, thats your problem. IF you believe so strongly about who you want into office, you CAN make a difference. It just depends on how much effort you want to devote to making that difference. Sure its easy to sit back and bitch and complain all day about what pisses you off and about who is in office in this country... but are you doing anything to change it? No youre not.
And as far as the government control in this country, keep this in mind. The Republican party is FOR keeping the government out of your life. The Democratic part is FOR controlling your life, telling what you can and cant do and making the decision what is best for you rather than letting you decide on your own. (Sounds alot like communism doesnt it?)
I believe who is in office DOES make a considerable difference on how much the government affects your daily life. No radical changes? What about the SS changes? Having your own personal social security account rather than the government holding and spedning your money? Thats getting government control OUT of your life. (lets not turn this into a social security debate please, im just using an example).
So anyway, if you have a problem with the president, then vote for the opposition and do something to make a difference rather than sitting and bitching.
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How about $6 Trillion spent on the war on poverty from the great society "Johnson" late sixties. Basically no change in poverty rate in this country. Proof that tossing money at untrained and dependant class of people does not work in resolving poverty. Changing environmental pressures does.
Remember the US Constitution states that the Gov't "Has the Responsibility" to protect and defend it's people, so any military spending is actually protected by the Constitution. While Anti Gravity would be an awesome advancement in science and technology, I'd like to see the actual budget and how many years were invested. Also, I'm sure that NASA, mass transportation, and the rest of the world would benefit greatly if it could be accomplished. But if you are correct on the spending, lets just compare one item to another: $2 billion for scientific research vs. $6 Trillion wasted on trying to fix poverty by throwing away money... which was the biggest waste of TAX PAYER MONEY?
And as far as you "not having a voice", elections these days ARENT a joke. What is a joke are the people who bitch and complain about the person elected into office and dont do anything about it. If you REALLY didn't want bush into office and you REALLY wanted to do something about it, then you could have assembled an organization to work at pushing the opposition. It's a free country, you have that right. Without a doubt, youll say "yeah right, how am I supposed to do that?" Don't ask me, thats your problem. IF you believe so strongly about who you want into office, you CAN make a difference. It just depends on how much effort you want to devote to making that difference. Sure its easy to sit back and bitch and complain all day about what pisses you off and about who is in office in this country... but are you doing anything to change it? No youre not.
And as far as the government control in this country, keep this in mind. The Republican party is FOR keeping the government out of your life. The Democratic part is FOR controlling your life, telling what you can and cant do and making the decision what is best for you rather than letting you decide on your own. (Sounds alot like communism doesnt it?)
I believe who is in office DOES make a considerable difference on how much the government affects your daily life. No radical changes? What about the SS changes? Having your own personal social security account rather than the government holding and spedning your money? Thats getting government control OUT of your life. (lets not turn this into a social security debate please, im just using an example).
So anyway, if you have a problem with the president, then vote for the opposition and do something to make a difference rather than sitting and bitching.
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