Chase debit card skimmed? Chase won’t protect you

Debit card skimming is a fairly common occurrence these days, meaning that at least several times a year I hear about it happening in the general area where I live.  We’ve reported on why debit cards are not as well protected as credit cards in a past post, and this story confirms that fact precicely.

Details: I had and still have possession of my ATM card. On the 27th and 28th of last month 2 separate ATM withdrawals of $500 each were taken out of my account by hackers. On the 28th when I tried to use my card at a local merchant it was declined. Almost simultaneously I received a voicemail from Chasebank fraud division. I returned their call immediately and answered all their questions. They said my $1000 would TEMPORARILY be put back into my account pending their investigation. 5 HOURS later I was informed by ChaseBank fraud department that they had concluded their investigation AND THEY WERE NOT GOING TO REIMBURSE ME THE $1000 THAT WAS S T O L E N FROM MY ACCOUNT!!!
Why? Their 2 reasons: 1.) the 2 withdrawals were made in the same geograhical area in which I live. 2). there were no bad pin tries.

Of course, those reasons simply don’t add up with the reality of Chase’s very own ATMs being fitted with skimmers on occasion.  First, if your card is skimmed, it is very likely that local thieves are to blame and they will use it in your local area.  Second, if your card is skimmed, they will have your PIN number.  In any case, what idiot thief would take a debit card for which they did not have the PIN and try random PIN numbers at an ATM.

In this particular case, what Chase called the same geographical area turned out to be two places each more than 100 miles from where the customer lived.

Why does Chase do things like this that are so obviously out of touch with reality?  Until some insider leaks some emails that confirms that Chase frequently denies debit card fraud claims not because they don’t believe it is fraud but because they know they can get away with it, we’ll just have to speculate that is the reason.

Chase admits it practices parallel foreclosure

This is the first time I have seen Chase actually admit they instigate a parallel foreclosure whenever someone applies for a loan modification.  In the case of this great story from CBS 5 News in Arizona.  In this case, even though the homeowners had worked out a modification with Chase and made all required payments, Chase “accidentally” foreclosed anyways.

Is JP Morgan Chase looking to triple dip in the WaMu deal?

Chase clearly got a steal of a deal when it acquired the assets of Washington Mutual for under $2 billion in 2008.  With the deal, they got 2000 branches, $188 billion in sorely needed deposits and some huge potential gains on assets that they initial severely wrote down.  Additionally, they negotiated a heck of a deal with Fannie Mae and Freddie Mac so as not to be responsible for any of the loans WaMu sold off to investors blowing up.  Their deal was so good, they recently estimated that they stand to make about $25 billion from Washington Mutual’s mortgages above what they original estimated in 2008.

So why do they keep trying to go back and get an even better deal?

For one, they have been trying to grab some of Washington Mutual’s $6 or so billion in tax credits for two years now.

Now, some leaked letters that JP Morgan Chase sent to the FDIC indicate that they are demanding the FDIC pay them more than $6 billion to cover the costs of WaMu related lawsuits.

Seriously?  Even with $6 billion in lawsuit related costs, how was this not a smoking good deal for JP Morgan Chase?  Aren’t they getting a little greedy?

double triple

Why debit cards are a bad deal

Debit cards are at the heart of the battle between consumers and banks.  Until the overdraft protection laws from the Credit Card Act of 2009 took affect in August of this year, banks made $38 billion a year in overdraft fee income.  Banks can still reap huge rewards from the overdraft income stream by cajoling consumers (like Chase does) into signing up for voluntary debit card overdraft protection, or by allowing ACH transactions linked to debit cards (automatic payments, PayPal money transfers) to go through despite resulting in a negative balance.

An article in the Wall Street Journal today outlines another reason why using your debit card is not a good idea; your exposure to losses related to theft is far inferior to that if your credit card.

One of the big selling points of debit cards, highlighted in ad campaigns and on bank websites, is that you’ll have “zero liability” for losses if your card is lost or stolen—just like credit cards.

Turns out that’s only sort of true.

In fact, nearly every debit card comes with restrictions in cases of theft. Some banks limit your coverage if you are slow to report a lost card or potential fraud. Some don’t cover fraudulent ATM transactions. Some may require that you show “reasonable care” in protecting your card or PIN number.

The matter is a significant one. There were 38.6 billion debit-card transactions last year, far more than the nearly 23 billion credit-card transactions, according to the Nilson Report newsletter in Carpinteria, Calif. Banks encourage customers to use debit cards, since they are far more lucrative than cash or checks.

The loopholes grow out of different federal regulations for different cards. Under federal law, your losses from unauthorized charges on your credit card are limited to $50, and there is no time limit for when you must report the problem. Many issuers go further, waiving all losses due to unauthorized credit-card use.

Debit cards, by contrast, are covered under a different law, and the rules are much more complex. If you call your bank within two business days of discovering your card is missing, your losses are limited to $50. But if you wait, you could be on the hook for up to $500. And if you don’t report the problem within 60 days after it shows up on a statement, you might face unlimited losses.

In the late 1990s, and went beyond those requirements, promising reduced liability for their branded debit cards. But there are several loopholes: Visa’s “zero-liability policy” doesn’t cover ATM transactions, some business cards or PIN transactions that don’t go through the Visa network. It does cover transactions where you sign, which bring in more revenue than PIN transactions.

MasterCard doesn’t cover any transactions that require a PIN, and it won’t cover more than two theft events in a 12-month period. You must also exercise “reasonable care” to prevent your card from being misused. But that term is subject to interpretation. Have you failed to show reasonable care if you forget your card at a restaurant? That depends on the circumstances and your bank, a spokeswoman says.

Read more …

It is very easy for a bank to simply claim that you didn’t use sufficient care in protecting your debit card, or that there is no evidence of fraud (i.e. they accuse you of falsely calling a transaction you did as fraud), sometimes despite evidence that you were thousands of miles away.

Overall, you are better off using a credit card for transactions that you want to do electronically and then paying the bill off in full every month.

Did Chase employees lie to avoid getting stuck with a counterfeit bill?

This story is a little worrisome.  It’s one thing if an institution like a bank is out to cheat you through small print or policies that are heavily stacked in their favor.  But it is entirely another thing when a bank or its employees will flat-out lie to protect themselves.  In this case the evidence seems to implicate that Chase employees lied so as not to get stuck with a counterfeit bill.

What’s behind the Chase utility bill promotion?

Chase is offering $20 if you simply enroll your debit card in their bill-paying service and pay at least 3 bills.  What is their motivation for doing this?

Chase is one of the banks that has been aggressively pushing customers to sign up for automatic overdraft protection for debit cards.  A better name for this service would be punitive overdraft punishment.  This has been a huge money maker for Chase in the past and they are looking to regain some of the revenue they stand to lose since new government regulations banned them from turning this service on for all new accounts, without customers being aware of it. Fees from overdrafts have brought Chase billions of dollars of income per year in the past.

This so called overdraft protection will allow you to use your debit card even when there is no money left in your account, at the cost of $35 per overdraft.  Chase has been accused in the past of ordering debits and credits to maximize overdraft likelihood and revenue. While the new laws prohibit banks like Chase from having overdraft protection on by default, there is an important loophole:  They can still opt to process automatic/recurring debit card payments, such as for a utility bill, even when it would draw your account below zero.

So why is having you sign up for bill payment with your debit card good for Chase?  Automatic payments to your debit card are likely to cause your checking account balance to be recorded improperly in your checkbook.

Even the most diligent of people is likely to forget to account for recurring debit transactions either before or after the fact, which means that they will likely not plan for a sufficient balance for an upcoming debit transaction for a utility bill, or will forget to record it and assume their balance is higher than it is, causing an overdraft to occur (if they opted in to overdraft protection).  Either way, Chase greatly increases the likelihood that they will capture significant overdraft fee income by getting customers to sign up for automatic payments on their debit card.

This is not a good deal.  If you want to automatically pay your bills, use a credit card, which won’t have the same problems.

Do you need to be in the news to get a loan mod with Chase?

This story is so typical Chase.  Family falls on hard times, in this case because they have a gravely ill child.  Chase has initiated foreclosure proceedings in parallel with the homeowners seeking a loan modification and days before the foreclosure sale is scheduled, Chase tells them that they have been approved for a HAMP loan modification.  But, the papers never arrive and the house is sold back to Fannie Mae.

The reason this case didn’t stop there is that the Washington Post wrote a story on this particular family and their plight, and Chase decided that they would take a second look at the families situation.

For one thing, under Fannie Mae protocols (Chase just serviced the loan) the family should have been offered other modifications options.

So the publicity put pressure on both Chase and Fannie Mae and they discovered the case had not been handled properly.  The foreclosure has been reversed and the family is being offered other modification options.

Is this really the only way to get treated fairly by Chase contact the press?

Dealing with zombie debt

An excellent article in the October issue of Consumer Report discusses what they call zombie debt – debt that is very old and may have been resold many times to many debt collection agencies.

Importantly, the article has some information on debt that you may not know:

Statutes of limitations exist on the length of time a collector has to sue a debtor, as do restrictions on reporting the debt to a credit agency. But there’s no time limit on the sale of debt. And many states let debt collectors revive a debt that’s past the statute of limitations if they persuade the consumer to make a payment.

The fact that various statutes of limitations apply to old debt makes it even more troubling to see Chase confiscating funds to satisfy old debts, valid or not, without any warning, notice, or opportunity to challenge the validity of the debt.  Often times this old debt is from companies that Chase has acquired over the years and the details of the debt may not be recorded properly.

If you have funds confiscated by Chase I urge you to challenge them as to the validity of the debt and investigate the statutes of limitations that may apply in your state and at a federal level.  Every challenge to this practice makes it less profitable for Chase.