Known Scam?

[Xerxes]

So guys, since you have worked in clearing systems, is there any form of payment that's 100% secure, so if I receive a payment, I can be 100% sure that this money is mine and will not be "clawed back" by the bank?

Apart from cash obviously.

Like the BACS payments made to me by an umbrella company, or a client: are they 100% mine once they hit my account?

Any other forms that are 100% safe?

Nope, there is no secure transaction of the sort you are looking for. No matter what form it takes (EFT, cheque, cash, diamonds, suitcase of cocaine), if the money was obtained deceitfully or unlawfully somewhere along the chain before it gets to you, it ain't yours and you have to give it back.

The only way you can ameliorate these risks to some extent is to use transmission means that are the hardest to carry out fraudulently (i.e. EFT or cash/other tangibles). Money is never, ever irrevocably yours.

[Xerxes]

So what is to stop somebody opening an account with a false identity and never closing it - Simply leave it open!

Nothing, other than the potential criminal penalties of being caught out.

[Rebecca Loos]

Nope, there is no secure transaction of the sort you are looking for. No matter what form it takes (EFT, cheque, cash, diamonds, suitcase of cocaine), if the money was obtained deceitfully or unlawfully somewhere along the chain before it gets to you, it ain't yours and you have to give it back.

Nice theory but surely you can see the impossibility of putting that in practice.

Let's say I steal some money
I then go and buy a car with it
I get caught and get convicted
Can whoever I stole the money from get it back from me, effectively having to cancel my payment to the car dealer? So the car dealer gets out of pocket?

Surely not - it would be impossible to trade otherwise!

[Xerxes]

Nice theory but surely you can see the impossibility of putting that in practice.

Let's say I steal some money
I then go and buy a car with it
I get caught and get convicted
Can whoever I stole the money from get it back from me, effectively having to cancel my payment to the car dealer? So the car dealer gets out of pocket?

Surely not - it would be impossible to trade otherwise!

You have neatly outlined precisely how the banking system works. It is entirely based on trust. If you use stolen money to buy something, the person you bought it off is, indeed, the one left out of pocket. The fact that it is money rather than a tangible, makes no difference. If you buy a stolen telly off a bloke down the pub and he is caught, you have to give the telly back and you are left out of pocket. The principle is exactly the same.

Caveat Emptor.

[Rebecca Loos]

very interesting. Don't know what to think really! The whole money supply for many people (since most of the money we manipulate goes through banks at some stage) is based on trust.... seems a bit lightweight to me!

[Xerxes]

very interesting. Don't know what to think really! The whole money supply for many people (since most of the money we manipulate goes through banks at some stage) is based on trust.... seems a bit lightweight to me!

It is interesting, and little understood. It, of course, in large part originated when currency that was of no inherent value (i.e. not made of precious metals) was introduced and little has changed since then. The entire global banking system is 100% based on trust, which is why fraud is treated (and punished) so severely in all mature economies. If that basis of trust were lost, the global economy would collapse.

[AlfredJPruffock]

It is interesting, and little understood. It, of course, in large part originated when currency that was of no inherent value (i.e. not made of precious metals) was introduced and little has changed since then. The entire global banking system is 100% based on trust, which is why fraud is treated (and punished) so severely in all mature economies. If that basis of trust were lost, the global economy would collapse.

Fascinating.

At least now I know why nobody will lend me a fiver, its to protect the Global Economy.

[expat]

You have neatly outlined precisely how the banking system works. It is entirely based on trust. If you use stolen money to buy something, the person you bought it off is, indeed, the one left out of pocket. The fact that it is money rather than a tangible, makes no difference. If you buy a stolen telly off a bloke down the pub and he is caught, you have to give the telly back and you are left out of pocket. The principle is exactly the same.

Caveat Emptor.

Not quite, I think: the analogy is that you steal the money, buy a legit TV from Argos, then when they find out that you had stolen the money, they take it back from Argos. That doesn't happen with cash. So Argos would be secure in accepting your cash.

Likewise, if Dodgy Bodyshops Ltd pay my invoice in cash, they may sue me later if it turns out that they shouldn't have, but they can't (legally) just whip it back out of my pocket. But that's exactly what the bank does when they unclear a cheque.

So I am secure in accepting cash, in a way that I am not in accepting a cheque.

Now, is a BACS payment able to whipped back out of my account later, after I've gone and spent it, or is it like cash?

[Xerxes]

Not quite, I think: the analogy is that you steal the money, buy a legit TV from Argos, then when they find out that you had stolen the money, they take it back from Argos. That doesn't happen with cash. So Argos would be secure in accepting your cash.

Likewise, if Dodgy Bodyshops Ltd pay my invoice in cash, they may sue me later if it turns out that they shouldn't have, but they can't (legally) just whip it back out of my pocket. But that's exactly what the bank does when they unclear a cheque.

So I am secure in accepting cash, in a way that I am not in accepting a cheque.

Now, is a BACS payment able to whipped back out of my account later, after I've gone and spent it, or is it like cash?

No, that's not right I'm afraid. The medium the financial transaction takes is totally irrelevant. Argos is not entitled to that cash as it was not yours to give them in the first place. They must return it back down the chain and if they can't get the telly back that's just tough luck for Argos.

Everyone in the chain after the point the fraud occurred could potentially end up out of pocket.

You are possibly "more secure" in accepting cash only because it is potentially harder to get it back if something went wrong earlier in the chain. The defence of "I bought it in good faith" is a complete legal fiction. It ain't yours and you have to give it back.

Seriously, the transmission medium is completely irrelevant. A bank could (and they do) grab a BACS back in just the same way.

[expat]

No, that's not right I'm afraid. The medium the financial transaction takes is totally irrelevant. Argos is not entitled to that cash as it was not yours to give them in the first place. They must return it back down the chain and if they can't get the telly back that's just tough luck for Argos.

Everyone in the chain after the point the fraud occurred could potentially end up out of pocket.

You are possibly "more secure" in accepting cash only because it is potentially harder to get it back if something went wrong earlier in the chain. The defence of "I bought it in good faith" is a complete legal fiction. It ain't yours and you have to give it back.

Seriously, the transmission medium is completely irrelevant. A bank could (and they do) grab a BACS back in just the same way.

In my Argos case, nobody's saying "I bought it in good faith". Argos accepted cash. Cash is always good. I'm sorry, but I find it hard to believe that if I obtained half-a-dozen tenners by illegit means and went and bought a telly at Argos, anybody would then claim that Argos had to return the money. That I had to, yes. But Argos's sale of the TV to me is not part of the chain of fraud or whatever that got me the money, that's why it can't be undone as part of undoing the misdeed.