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Fidelity Slashes Mobile Deposit Limits Following Fraud Wave
Fidelity slashed the amount certain customers can deposit into their cash-management accounts to $1,000 from $100,000, people familiar with the matter said. The Boston firm is also subjecting some account-holders to a 16 business-day hold on deposits before the money is made available for withdrawal or investment.
The restrictions don’t impact retirement accounts, such as 401(k) plans. Instead, they focus on cash management accounts, a type of brokerage account used to make purchases, pay bills online and withdraw funds from ATMs. Deposited checks typically take two to six days to clear.
The scheme targeting Fidelity’s mobile-app shares some similarities to the check-fraud scams that have hit JPMorgan Chase and other banks recently.
The organizers rely on social-media platforms such as Telegram and TikTok to recruit customers of those firms. In exchange for access to their accounts, customers are promised a cut of the proceeds. The swindlers deposit fake or doctored checks and then quickly withdraw those funds.
What are these foolish customers thinking? A one-time fraudulent deposit followed by a large withdrawal is not only traceable, but may block the account.
But 16-day business hold? Fido CMA isn't a bank a/c, but can banks do that?
This is a copycat of JPM ATM withdrawals and that is being investigated by the law enforcement.
People have reported that Fido has been crediting ACH transfers quicker than the normal 2-3 days*. People don't realize that Fido is extending credit to its good customers, but when they deliberately or unwittingly start abusing it, that may stop too.
What are these foolish customers thinking? A one-time fraudulent deposit followed by a large withdrawal is not only traceable, but may block the account.
Speaking as someone whose career involved thinking like a criminal / terrorist / bad guy while being on the side of good, it's a sign of the times ... how much the average person DOESN'T know about the world around them or how it works. Sure, there's a ton of 'information' out there, but much of it is noise meant to distract and entertain people while generating profits for the producer/influencer.
'Check fraud' is a foreign concept b/c who under the age of 50 still uses checks? It's all Venmo, credit/debit cards, EFT, or other appified payment schemes.
Fraud is fraud, period. But the 16-day hold is more than excessive, that's for sure.
Comments
But 16-day business hold? Fido CMA isn't a bank a/c, but can banks do that?
This is a copycat of JPM ATM withdrawals and that is being investigated by the law enforcement.
People have reported that Fido has been crediting ACH transfers quicker than the normal 2-3 days*. People don't realize that Fido is extending credit to its good customers, but when they deliberately or unwittingly start abusing it, that may stop too.
Of course, the Fed rolled out instant transfer facility FedNow last year that is being adopted gradually.
https://www.frbservices.org/financial-services/fednow
*Order entry on Day1. Institution-to-institution electronic transfer on Day 1-2. Wait for error reports on Day 2-3. Account credit on Day 2-3.
'Check fraud' is a foreign concept b/c who under the age of 50 still uses checks? It's all Venmo, credit/debit cards, EFT, or other appified payment schemes.
Fraud is fraud, period. But the 16-day hold is more than excessive, that's for sure.