Debit and Credit Card Security

payroll-debitcardLittle Rock  There was an interesting piece in the paper about what one commentator jokingly referred to as a “hot bank on bank” story based on First American Bank of Chicago going public and shaming Bank of America and Mastercard for not shutting down and issuing warnings about taxicab machines that were perpetrating debit card thefts.  They had caught the problem one day when a couple of dozen of their customers were hit, and had issued almost 500 new cards to try to prevent the problems, but went public after 18 days when they couldn’t get any action or response from Bank of America and Mastercard who were handling the transactions.   These days it feels like all of us either have “been there, done that,” or are preparing for the worse to come someday soon because the card folks just aren’t doing right on protecting security.

             The card companies say, no problem, they have a “zero liability” policy, meaning that customer doesn’t absorb the burn, but the article correctly points out that this is little comfort for many, and that’s what I want to underline here.  Increasingly companies are moving to direct deposit or where lower income workers are “unbanked,” issuing debit cards that are loaded with their pay.  In negotiating one of these programs recently for a 400-worker unit represented by Local 100, the company had gone as far as they reasonably could to assure us that this would work better for our unit, and in fact we had a petition going around the worksites complaining about payroll snafus, so we were a ready audience.

            But, look at the problems even in the best of circumstances and with the best of intentions.  There was an offer for the workers to choose either Chase or Bank of America for their cards, but once we looked Bank of America in fact had shut down all of their ATMs in Baton Rouge and these workers were concentrated in that city as well as Lafayette and New Orleans, so clearly that was not going to work for 150 workers there, and if they mistakenly chose the wrong bank, there would be a charge on every other ATM they were using to access their money.   The cards were designed so that there were no charges if you took all of your pay in cash in one lump, but we all know that many ATMs, especially in our neighborhoods, limit the amount of withdrawals so that’s another problem.  You could use the debit cards to buy some things without charges, but there were hidden shoals sure to crash some of our members’ boats. 

            We’ll work it out as best we can, but there’s only so much the union and company can do, when the credit card outfits and their banks refuse to take security seriously.  When there is a problem these will be workers with no money and a deluge of bills and problems.  Recently we found a charge of almost $1000 on a corporate American Express card at Fair Grinds Coffeehouse.  The company says no problem, we’ll figure it out, but that was a couple of weeks ago, and this is the Chicago bank’s complaint.  They waited 18 days.  We’ve been waiting at least that, but lower waged workers are in no position to hang out with no money for 24 hours much less 24 days.

            I also can’t get the story out of my mind of the McDonald’s workers in New York City who were paid on debit cards as well, but the franchise operator was less careful than our company and the cards were loaded down with charges driving the workers’ wages below the minimum as they tried to access their money.  The settlement is on its way, but they’ve been waiting and without in the meantime.

            A business model that screws the customers because the companies don’t want to use cards with embedded chips or take other security measures seems destined to fail, but in the meantime the rough edge is dragging, particularly on lower waged workers and smaller businesses not in position to wait for the by and by.


More News of Banking as a Criminal Conspiracy with BofA and Chase

Bank of America Country BankNew Orleans    There are many small town papers that used to thrive by feeding their readers the daily police reports.  These days reading the financial pages is more than an adequate substitute, since every day we seem to get another perp walk in the criminal conspiracy now called modern banking.

I know it’s tedious to keep returning to our old nemesis, JP Morgan Chase, but let’s face it, under Jamie Dimon and their pursuit of being the biggest bank in the land; they seem to be unable to keep from also being the baddest bank in America.  This time they are trying to enter an agreement to prevent criminal charges for their role as the main Madoff bank enabling his massive Ponzi scheme for over 20 years.   Internal emails seem to abound about suspicious while the bank counted their millions and helped him along the way while doing so.  The arm so clearly understood what the hand was doing that Chase’s private bank refused to take Madoff as a client even as the main bank was his counting house.  Now, late in the game they seem willing to promise that they won’t let this happen again, but will report suspicious activity in the future, but most of us must realize that these big, bad boys will be breaking that agreement even while ink is drying on their signatures.

Meanwhile Bank of America went to a jury trial to try to prove that they didn’t defraud the government by selling packages of bad mortgages directed by the executive, Rebecca Mairone, who was running that part of the show for Countrywide, which is now part of their diminished empire.  Bad move, team!   Mairone ran something it turned out that they called the “hustle,” a nickname for HSSL or the “high-speed swim lane,” which seems to have been a steamed up boiler room operation that pitted bankers in a competition to see who could originate loans more quickly, credit be damned, so that they could bottle the slop up and sell it off on the government’s secondary market.

The jury was disgusted, so “guilty as charged.”   The government is asking for almost $900 million as a penalty to be paid by Bank of America, though the judge will decide of course.  There’s also every indication that there will be a line forming for stockholder and other class actions now given the guilty verdict.

The jury also found Rebecca Mairone guilty as the day is long.   Her lawyers say, it’s not over yet.   Luckily, she still has a job in banking.   You may wonder where she’s working now?   JP Morgan Chase of course where the biggest of the bad boys run wild and free.



Banks Creating Unbanked Millions

money-under-bedLittle Rock       I hate to say “I told you so,” but of course, I in fact did tell you so, when I recently warned that banks for any reason or no reason at all can refuse to continue to allow you to have a checking account or bounce you out of their customer line.  A recent article in the Times confirms that in fact the level of what used to be called the “unbanked” has risen by 10% since 2009 according to the Federal Deposit Insurance Commission (FDIC).

            And, yes, “unbanked” does sound like the “undead.”  You may be walking and talking, but you are also doing a lot more of it and paying a premium to pay your bills, transfer money, and handle daily affairs because banks won’t let you have an account.   This is actually a fairly new phenomenon.  Only a couple of years ago if we were meeting with bankers and said that we needed to continue to reduce the level of the unbanked among lower income Americans, all of the bankers at the table would reflectively nod in agreement.

            No more it seems.  Big data is dunning the poor.  Minor mistakes, like a one off overdraft can lead to people being blacklisted.   According to the Times:

The largest database, founded in the 1970s, is run by ChexSystems, a subsidiary of FIS, a financial services company in Jacksonville, Fla. Subscribers — Bank of America, JPMorgan Chase, Citibank and Wells Fargo among them — “regularly contribute information on mishandled checking and savings accounts,” ChexSystems says on its Web site. “A consumer may dispute any information in their file and ChexSystems will facilitate the resolution of the dispute on the consumer’s behalf,” the company said in a statement. A rival, Early Warning, which is owned by Bank of America, BB&T, Capital One, JPMorgan Chase and Wells Fargo, says roughly 80 percent of the 50 largest American banks pay a fee to subscribe to its deposit-check service.

The banks claim this all began as an attempt to stop fraud, but that’s not really true.   Bankers have been honest with us for years that the old school checking account part of their business was a money loser and in fact a loss leader.  Here comes big data that can collect every misstep by a poor Joe or Jane along the road, and wham, that’s all it takes to push them into all of the financial predators lying in wait for the poor. 

Good luck with resolving the disputes as well, that is if you know there is one.

The article claims that, “Banks are required to provide a reason for rejecting an applicant,” but I’ve read some of the documents that banks put out, and I’m not sure that is really true, and if true, it’s certainly not enforced.”

But all of these financial institutions are federally or state chartered.  The FDIC insures each account for a hundreds of thousands of dollars.  There is huge governmental leverage here that should be reminding banks that they are in the service business not just the get-rich-quick-business.   If they want to stop fraud, good on them, though they might spend more energy supervising some of their own practices, and trying to hard handle someone whose check clears faster than the bank gets around to recording their deposit.



Workplace Occupations

Revolt-On-Goose-Island-235x279Rock Creek   The Kindle needed some juice and it was too early in the morning to get the converter humming, so I grabbed a book for a couple of hours that had been gathering dust at home, Revolt on Goose Island:  The Chicago Factory Takeover, and What it Says About the Economic Crisis by Kari Lydersen.  The book details the prequel and some of the postscript to workers occupation of their factory as Republic Windows and Doors tried to close them down in 2008 right after Barack Obama was elected as President. 

Most will remember that for some reason this incident then attracted wide attention because it reflected so much of the climate of anger around the economy at the time, job loss with warning, and the original argument by the company’s owners that they had been squeezed by the failure of Bank of America and J.P. Morgan Chase, even as they were receiving tens of billions of dollars in bailout monies.   The book ends with the belief that workplace occupations might become a common tactic for workers something on the order of the factory takeovers in 2001 during the Argentina financial crisis.

            If newspapers once wrote the first draft of history, then this book did a solid job on the second draft.  I had not realized that the UE union representative who developed the tactical response for the workers had been Mark Meinster, a former ACORN organizer in Washington, D.C, so that was interesting in itself.  But, what really got me scratching my head is why in the aftermath of the Occupy Wall Street phenomena and the occupy this and occupy that, why in fact has the Republic Windows situation not been duplicated more by angry workers being displaced from their jobs, as Lydersen seemed to believe might be possible?

            Of course the obstacles are huge for such a tactic, starting with trespassing arrests on private property and in unionized situations, most times the pre-shutdown bargaining, when it happens, provide enough to blunt some of the outrage.  But, increasingly workplaces are not unionized, so workers in such predicaments are on their own.   So, when people get screwed and they’re mad as hell, why aren’t they sitting in at their workplaces until they get severance or the straight story or something that explains the years of their lives they put into a company that is tossing them to a curb, especially when at that point they have nothing much to lose and their self-respect to salvage? 

I’m left scratching my head.    Seems like to me “occupy work” would be boiling over from place to place everywhere by this time?  Perhaps this is one of those explosions happening with a long, slow burning fuse.


Chase and Other Banks Need Policing & Regulation on Pay Day Lending Abuses

Little Rock       It takes a lot of newsprint and video clips to bring Jamie Dimon, the arrogant chief of JP Morgan Chase, one of USA’s largest banks, down but stories in the Times picked widely of Chase enabling predatory on-line payday lenders by allowing hundreds and thousands of overdraft and other fees to empty workers’ accounts when payday companies tried to collect payments scores of times over a matter of days.  He claimed he was going to fix the problem.  It is clear his fix is the same as the “fix is in,” and is a wave at the problem without any real reform.

Dimon and Chase claim they will only stop assessing NSF (non-sufficient fund) charges when an account is empty rather than continuing to kill the dead horse.  To respond to the problem with customers having paid off the loan but being unable to stop the payday predators from continuing to access automatic withdrawals, Chase claims they will “better train” their workers.  Are you kidding me?!?  That’s another way of saying, good luck, Charlie!  Chase claims that they will make it easier for customers to leave Chase and close their accounts to stop them from being raided with Chase’s help by letting people close if Chase itself deems the charges “inappropriate.”  They say they will alert the Automatic Clearing House (ACH) which manages the transfers about frequent abusers.  This is a bank tool, not a regulator!  This is no reform.  This is in fact is the same as saying you will do nothing, but simply using more words to say nothing.

Even more unbelievably though Chase is greeted with applause for doing nothing because Bank of America, Wells Fargo, and others said nothing, meaning they intend to do nothing or at least are waiting to see if they can get away with it.

Somewhere in all of this the fact that Chase and the rest are enabling a criminal conspiracy seems to be lost.  By allowing deductions they are “aiding and abetting” a crime since many of these on-line companies are skirting state laws capping interest and regulation payday lending.

Dimon and Chase are simply putting a fig leaf in front of the fact that they should be vetting the transfer process and instead are joining in the fleecing of their customers through illegal activity.

Jessica Silver-Greenburg reports that:

The changes come as state and federal officials are zeroing in on how the banks enable online payday lenders to bypass state laws that ban the loans. By allowing the payday lenders to easily access customers’ accounts, the authorities say the banks frustrate government efforts to protect borrowers from the loans, which some authorities have decried as predatory.

Both the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau are scrutinizing how the banks enable the lenders to dodge restrictions, according to several people with direct knowledge of the matter. In New York, where JPMorgan has its headquarters, Benjamin M. Lawsky, the state’s top banking regulator, is investigating the bank’s role in enabling lenders to break state law, which caps interest rates on loans at 25 percent.

Let’s hope the government acts quickly and aggressively, because Dimon, Chase, and the rest of the gang are clearly just shaving off a couple of pennies here while they help clean out working families bank accounts.  There ought to be a law, and in fact thanks to some states, there are laws.  Now we have to see if these folks are going to enforce the law, because that’s all that can stop this.


More Evidence of Home Invasions by Zombie Bank Criminal Conspiracy

New Orleans   Evidence of the death march of the zombie bankers continues as they desperately try to shore up balance sheets based on non-existent assets with continued predatory cannibalization of homeowners through blatant home invasions and foreclosure seizures.  Two more stories provide more evidence of both the criminal conspiracy and the banks blatant lying that has won them sweetheart settlements with the government to let them steal with impunity.

The recent deal with the banks that stopped their self-supervised investigation of their own wrongful foreclosures because they lacked documentation or had used robot signatures or other faulty paperwork for a sweetheart deal seems now – to no surprise! – to have been uncovering MORE faulty foreclosures than previously disclosed.  The sweetheart deal, as you will remember, had also made the banks judgment proof on these issues in the future.  Once again the government caved in and seems to have been snookered.

News breaks today that indicates that, “Wow, yes the banks evicted people by mistake!”  Seven hundred (700) military veterans lost their homes this way according to a story by Jessica Silver-Greenberg and Ben Protess in the New York Times.   Dan Petegorsky with the Campaign for a Fair Settlement correctly called the earlier sweetheart deal a “step backwards, which is an understatement if anything.  Can the deal be unraveled and really negotiated?  Unclear to me from anything I’ve seen.  At the least perhaps there are other cases still out there where a real settlement might finally be reached to provide relief for those facing foreclosures and the millions of victims crippled already.

Having ranted for years about the work of Arizona Advocates & Action winning the case of Frances Gomez in Phoenix when Bank of America stole her house, were forced to admit the theft, and then still wouldn’t return the house for years or give her a fair settlement, none of this is a surprise, but an open sore wound that the government keeps allowing to fester.

How about a break here, Mr. President?