The Canadian government this week announced upcoming changes to federal banking rules, designed to reduce "consumer irritants," and make banking more transparent and fair. Unfortunately, the new rules are also a dream for the nation's con-artists.
One set of changes, for instance, relates to holds on deposited cheques. Currently, people with bad credit may have a 5-7 day hold put on all non-cash deposits. According to the new rules, banks must provide access to the first $100 deposited by cheque into the bank, no matter what the credit score of the individual opening the account. And, for any cheque less than $1500, the maximum hold is 4 days, down from the previous 7 days. For the working man with spoiled credit, these changes are convenient. But, it's for con-artists that the new rules really shine.
Once the new rules are in place I can, as a con-artist, now open an account at a bank, deposit a $100 cheque (payable to myself) from my account at another institution (with no money in it), and then take out the $100 as cash! Awesome! Even better, I can write a cheque to myself for $1499 from my $0 balance Credit Union account in Toronto or Montreal, deposit it into a new account at a bank in Vancouver, and only 4 days later walk away with $1499 in cash, courtesy of the new 4-day hold maximum (cross-Canada cheques often take more than 4 days to be returned NSF).
Canada's crack addicts will be busy opening accounts at every bank in town, guaranteed a $100 minimum payday for each new account.
Among other changes, the new banking rules also ban unsolicited credit card "convenience cheques," which most banks have discontinued anyway since they tend to get stolen from the mail and used by 3rd parties. The ban was introduced because Canadians - like their American counterparts during the last housing boom - have shown a remarkable inability to delay gratification (Canada's personal debt levels are at record highs), and would presumably use the cheques if they received them.
Canada's banks will no doubt fight the new legislation, since it leaves them exposed to millions of dollars' worth of preventable fraud.
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"It's easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities."
Josiah C. Stamp, economist
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See also:
Goodbye to three irritating bank practices
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