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NY Payroll Company Vanishes with $35M

krebsonsecurity.com

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Re: NY Payroll Company Vanishes with $35M

#31

Post by mattwad »

ska wrote: post #23
the-dude wrote: post #20

Earlier quoted context omitted.

What is an overdraft fee? How much is it? Is it interest?

This is a flat fee assessed if your account goes into "overdraft" to cover a check (or other liability). If your account is set up to do this (pretty standard in the US) rather than a check failing to clear your bank will cover the check and charge, e.g. $30-$50 for covering it. Of course you owe the overdraft amount as well.

I also think it's mostly meant to be a deterrent. When I had BofA, any time I got overdraft I just called and they would take it off, usually without an explanation.

Re: NY Payroll Company Vanishes with $35M

#32

Post by patio11 »

Since this is sort of my beat:

If this ever happens to you, immediately call bank, say “Electronic transaction posted in error.”, specifically identify the transaction, and ask what address the bank takes Regulation E written complaints at. If the CSR doesn’t know that answer, their supervisor does, or in the alternative FedEx HQ addressed to chief counsel or head of compliance. The letter just needs to state transaction details, date you first called them, and your desired action (“Credit me back $X.”), but it’s marginally more effective to say Regulation E in it since that will put the fear of God into whomever opens it.

You’ll get the money back.

Re: NY Payroll Company Vanishes with $35M

#34

Post by lotsofpulp »

apacheCamel wrote: post #27
gregmac wrote: post #11

This was confusing to understand, because multiple bad things happened. Normally: * Step 1: Transfer funds from each Employer's account to Cachet's holding account * Step 2: Transfer funds from Cachet's holding account to each Employee account Both of these steps are handled with an 'instructions file'. --- The crime (or horrible mistake that really looks like a crime): Step 1's file was changed so that the funds wen…

Thank you for explaining it, you did a great job at helping me understand what happened. The whole process seems way too convoluted for something as serious as paychecks. It really relies on everybody acting in good-faith and in the proper fashion. By Cachet working Step 2 before Step 1 and possibly assuming Step 1 was going to happen, they already were too far gone and only made the situation worse for them and a bu…

The whole idea of ACH transfers and giving everyone write access to everyone's account in this day and age is crazy to me.

There should not be a way for money to leave an account without the account owner's explicit permission.

Re: NY Payroll Company Vanishes with $35M

#35

Post by patio11 »

antaviana wrote: post #18

In the US anyone with your bank account number can debit your account irreversibly? In Europe (with SEPA Core) we have 8 weeks to reject any debit even if the entity issuing the debit has a signed mandate to debit the account.

Knowledge of a bank account number is sufficient to attempt to debit it. Whether it will appear to succeed or not depends on the bank and a variety of factors. Regardless of whether it initially successes, it is (very) reversible.

There’s a lot of technical nuance here which I’d ordinarily geek out on but don’t quite have the time to today.

Re: NY Payroll Company Vanishes with $35M

#36

Post by caseysoftware »

apacheCamel wrote: post #24

Honestly, this is really scary. Personally, I would be unable to take a [2x my bi-weekly salary] hit to my account and that would result in a pretty negative balance. I think I recently saw an article about a bank depositing too much money into an account and the account owner spent it then got arrested. It just seems like the people in charge of how we get/hold our money can screw up with minimal blow back, yet the…

They got arrested because $120k was deposited incorrectly and they spent it. Once the bank called them, they continued spending it.

If the couple had left it in their account and returned it when asked, there would not have been an issue.

Re: NY Payroll Company Vanishes with $35M

#37

Post by patio11 »

soneil wrote: post #9

This does seem like a nightmare scenario for the vast majority (4 in 5?) of Americans who live cheque-to-cheque. Your pay is yanked, life doesn't stop and the bills keep coming. A few days, a week later, it's corrected and the pay reappears. Who's on the hook for your overdraft fees?

Overdraft fees: depends on your bank’s policies. Many low sophistication bank users will eat fees in this case and not attempt to get them reversed or not successfully convince T1/T2 CSRs to push the button for them.

Words which are close to magic here: “The bank assessed this fee incident to an overdraft caused by an EFT which was subsequently reversed under Regulation E. Will the bank waive this fee for me?” (If you are less in a Dangerous Professional mood or don’t have a hobby interest in banking regulation, my next best suggestion is “Can the bank waive this fee since I’m a good customer?” hear no “I would be disappointed if we can’t fix this, because I have been a loyal customer for years. What can we do here?”

Re: NY Payroll Company Vanishes with $35M

#38

Post by isostatic »

notfromhere wrote: post #29
isostatic wrote: post #26

Earlier quoted context omitted.

If you earn 3k a month, one month you get paid 100k, and you spend 5k on normal things, you aren't going to be arrested. If you earn 3k a month, one month you get paid 100k, and you spend 95k on stuff you don't normally buy, you are going to be arrested. If you pick up 20 centrs from the floor and spend it, you won't be arrested. If you find $50k in a bag and spend it, you will be.

I'm pretty sure if you find a bag of money on public property, you're under no obligation to actually return it.

Does that apply to any property that isn't yours?

Re: NY Payroll Company Vanishes with $35M

#39

Post by privateSFacct »

lotsofpulp wrote: post #34
apacheCamel wrote: post #27

Earlier quoted context omitted.

Thank you for explaining it, you did a great job at helping me understand what happened. The whole process seems way too convoluted for something as serious as paychecks. It really relies on everybody acting in good-faith and in the proper fashion. By Cachet working Step 2 before Step 1 and possibly assuming Step 1 was going to happen, they already were too far gone and only made the situation worse for them and a bu…

The whole idea of ACH transfers and giving everyone write access to everyone's account in this day and age is crazy to me. There should not be a way for money to leave an account without the account owner's explicit permission.

We insisted that our bank provide positive pay for ACH. If you are a business you should consider this if you hold large balances. It works very well. Only authorized ACH entities up to authorized limits can debit (or I can set it to notify and someone has to approve each one).

Re: NY Payroll Company Vanishes with $35M

#40

Post by ska »

mattwad wrote: post #31
ska wrote: post #23

Earlier quoted context omitted.

This is a flat fee assessed if your account goes into "overdraft" to cover a check (or other liability). If your account is set up to do this (pretty standard in the US) rather than a check failing to clear your bank will cover the check and charge, e.g. $30-$50 for covering it. Of course you owe the overdraft amount as well.

I also think it's mostly meant to be a deterrent. When I had BofA, any time I got overdraft I just called and they would take it off, usually without an explanation.

That's true, but as in other areas I think it probably has a lot to do with how much they value your future business.
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