> And why do you think it is fair to make a bank pay for your fees
Because if the bank broke their legal obligations to the customer and the consumer had to use a attorney to recover their money, the attorney deserves to get paid.
Banks are expected to know their customer and to take measures to prevent fraud, rather than watching money go by and shrugging because they made a few nickels.
You're right up to the point where the context is fraud.
the bank is not required to process transactions for an impersonator. the opposite in fact, it's supposed to filter out the fraudster's transaction! even if his password leaked, none of that matters. the transaction is valid only between the bank and the individual, any failure in communication between those two is the bank's problem, it just depends on how loud the scammed consumer is willing to be.
in China today there are people in Henan province that had their money completely stolen from their accounts... by the bank owner! and who's responsible? the central bank of course, and they will all be repaid, and very fast now because they protested very very loudly
Exactly my point: banks should be responsible for doing the job they are paid for, processing transactions, and should not be liable for someone else's lack of judgement.
The fact that it is legal to make banks pay for such things does not mean it is just, moral or ethical.
We have a few hundred years of legal tradition around banking and commercial transactions, that have been carefully balanced in ways to give everyone involved an incentive to prevent fraud and to produce a system in which the amount of fraud is manageable.
Externalizing all the risk out to the individual customers doesn't seem like a preferable system. Banks have done a whole lot of work to make the risks associated with this manageable and even profitable.
Consumers are safer, and also it is more reasonable to trust the payment system to have safe outcomes. As a result it is used more, and banks make more money.
> US banks in average lose 2-4 orders of magnitude more to fraud than banks outside of the US.
You think US banks lose 10000x as much to fraud as banks outside of the US?
Card fraud in Germany is 0.02% of transaction value. Does that mean it's 200% of transaction value here?
Most recent number I have for US is 6.81 cents per $100, or .07%. The regulatory regimes are not too different, between Europe and the US.
Banks are legally incentivized to reduce fraud, but even so US banks have resisted anti-fraud measures because they add friction to transactions. Witness them being slow to deploy chips to credit cards and electing not to deploy chip-and-PIN in the US.
P.S. I would avoid using the word "retarded", even misspelled.
Some anecdata: I used to work for a bank in Eastern Europe and we once lost a grand total of $6K to fraud one year with about ~1M cardholders.
10000x of that would be $60 per customer per year. Some neobanks here in the US lose more.
The point is, all the fraud loses end up being paid for by other customers.
So that guy changed his mind, filed a chargeback for a transaction he actually did authorize, and he and his laywer got paid by all other customers who did nothing wrong. And some folks who could have been happily banked ended up unbanked.
Every indication is that Europe has about half the payment card fraud rate of the US-- mostly explained by lower rates of card-present fraud due to use of chip-and-PIN.
I was surprised to see Eastern Europe have such a low rate of fraud from an issuing perspective, but it's still about half the European average. From the acquiring perspective, Eastern Europe is *ahem* well-represented in payment fraud.
> So that guy changed his mind, filed a chargeback for a transaction he actually did authorize,
That is not the facts or situation that the grandparent poster described.
You are looking at it from the wrong end, averages mask the issue.
Consider this: Romanian state employees generate multiple X less fraud than average Romanians. Bank serving them may lose cents per customer per year and make, say, $50 per year.
A neobank in the US engaged in predatory lending to gig workers may lose $60 per customer per year, but may make $200.
If you compare similar segments and similar business models, the difference can be 2-4 orders of magnitude, depending on segment.
That guy authorized crypto.com to access his bank account, crypto.com got hacked, and bank ended up paying him and his lawyer. What is not correct here?
Who had to foot the bill in the end?
> You are looking at it from the wrong end, averages mask the issue.
Your claim was there was 10,000x more payment fraud in the US than in these countries, due to the different regulatory regime.
Data indicates there's like 3-4x, and a lot of it is more easily explained by greater share of card-not-present transactions and lack of chip-and-pin.
> If you compare similar segments and similar business models, the difference can be 2-4 orders of magnitude, depending on segment.
Oh, so you want to compare the lowest-risk banking sectors in Romania to the highest risk sectors in the US? Sorry-- this does not make sense as a way to compare regulatory regimes.
In the end, banking losses due to fraud... and the systems used to mitigate fraud... cost just several basis points on payment cards in the US and a much smaller share than this on other transactions. This is tiny compared to the overall credit risks and the rest of the cost structure of the transactions.
When it comes to regulation E-- many banks even choose to compete by offering consumers greater protections than reg E requires.
I am merely giving you my experience running banks on both sides of the atlantic.
You can explain however you want. Chip and PIN is a big factor of course but is not the only one. ACH is a hot garbage and is a fraud vector which does not exist anywhere else. Remote account opening is a door wide open for fraud and, again, nowhere else.
Cost of fraud includes FTEs involved in managing fraud, software and infrastructure costs, lost opportunity etc. All those are incomparably higher in the US. I don't really care if you believe me or not, it is just my opinion.
LOL.
I just have to chuckle at trying to bring a moral or ethical argument in favor of banks, given their practices of maximizing of fees they charge to least able to afford them, how they reorder transactions to ensure people go over and they can then extract the most fees.
Because if the bank broke their legal obligations to the customer and the consumer had to use a attorney to recover their money, the attorney deserves to get paid.
Banks are expected to know their customer and to take measures to prevent fraud, rather than watching money go by and shrugging because they made a few nickels.