I call this progress, and believe it will cut down significantly on check fraud. Become a Complete Fool
Maybe it is progress, Haines, but my reaction is exactly the opposite: starting 28 Oct my personal financial transactions will be hackable from anyplace on earth. Theft that used to depend on obtaining and passing a physical piece of paper with a reasonable match to my signature can now be done from any computer anywhere. And to protect myself by getting a copy of the "substitute check", I have to pay a premium. I feel way more exposure, not less.
As to "kiting", I also have a different viewpoint. When my pay goes into the bank on Friday, I know the check is good and that it will clear on Monday. For all practical purposes the money is there; I know it, the bank knows it. If I choose to write a check against that money on Saturday there is neither harm nor foul, and I've done exactly that literally hundreds of times in the past thirty-some years. Same for automatic drafts by existing accounts that are timed to follow periodic deposits. But not so anymore; the bank will still sit on the funds until Monday, but I can't touch 'em on Saturday. To me, that feels like us little guys are getting screwed.
To your assertion that responsible banks will shorten their hold times, my response is that since the system has used the force of law to drive my "hold time" to zero, then the law permitting anything longer than zero hold time for the bank is unreasonable.
As to trusting the bank w/substitution of images of checks rather than the actual physical item, I have been very reluctant to do that. I've turned down bank offers to switch to that system. Guess I'm just a "stubby pencil" kind of guy, preferring the security and safety of a physical system to the dangers and ephemeral promises of a cyber system. The new system is even worse, though: as it's been explained to me, the "substitute check" it'll foist on me isn't even an image of my original check.
I don't think my banks are out to get me, but every bank I've ever had has made errors; if that weren't so then I'd feel no need to balance my checkbook periodically. I make more errors than the banks do, but the fact remains that the banks do make errors, and I find both theirs and mine when I reconcile. I'm all for minimizing the opportunity for those errors to occur. Usually it's a case of transposed numbers (quickly identified by checking to see if the imbalance is evenly divisible by 9) or other evidence of latent dyslexia, sometimes its a case of other types of errors or even stupidity like my forgetting to write down a direct deposit or the bank charging somebody else's check to my account. One town I lived in for a few years had another Tom Henderson banking at the same place, and the bank sometimes charged his checks to my account (never seemed to work the other way!). Just for fun, look in your phone book and count how many Tom Hendersons there are where you are; there's over a dozen in Detroit. With a common name like that confusion is inevitable. What the blazes will somebody do to prove the charge isn't theirs when the physical proof gets destroyed at the point of purchase and the premium charge for "substitute check" documentation doesn't include a signature?
And what about the potential for duplicate charges? The potential for chicanery is immense! All a miscreant has to do is hit "Control-D" and charge me twice, and what proof do I have that I didn't actually make two purchases? The weight of the system will be working against me and I will be trying to prove a negative.
My proof of what I actually spent is the returned check that I currently get. I will no longer have that proof under the new system. And I will have to trust the bank not to make errors, since they will no longer be handing the physical proof back to me. The bank can be as honest as honest is and have the best of intentions, but the fact that we are humans means that the bank will make mistakes. It doesn't look to me like the new system has adequate safeguards or adequate recourse for correcting bank error, and the burden of proof now appears to rest entirely on my shoulders. The bank used to have to provide proof in the form of cancelled checks, but now it doesn't have to prove a damned thing anymore.
This may move me back away from being a member of the "cashless" society. I may return to the days of cash and carry, no checks, no credit cards. Not that the bank will care. But I sure do NOT call that progress.
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I call this progress, and believe it will cut down significantly on check fraud.
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