Fidelity Freezing or Closing Accounts Due To Fraud

I've been seeing a lot of complaints about Fidelity closing various accounts or freezing accounts um and uh somebody posted this article or newsletter blog article about the problem um it says glitch plague spreads from Chase to Fidelity and others a glitch seems to be a security hole in the bank's platform which allows people to steal money from the bank so here they talk about uh fraudsters that love money glitches and uh it talks about check fraud check fraud has been a problem uh for decades and decades and decades and decades I used to read about it in the Perry Mason books from the 1950s and 1960s and uh the means of check fraud back then was to get a blank check and then Forge the signature uh other forms of check fraud would be to take if if the payment amount is say $10 then change it to something like $100 $10 uh that's not necessarily easy to do but there were people that did that so we have modern check fraud now so there's a thing called the viral infinite chase money glitch um recent it wasn't a glitch but a check fraud scheme that involved depositing fake checks into ATM machines and quickly wire transferring the money before the checks to be returned so uh I gave gu the idea is you open an account and then you create a check I'm not sure how that's done um maybe you get a blank check and fill in some information on it uh you put it into the ATM machines and the ATM machines have an instant cashback feature so you then you transfer the money out before the checks uh clear Chase quickly closed at exploit within a few days and the viral Trend died however this week frauders have discovered a new Target to attack Fidelity and their check fraud scheme seem suspiciously similar so this report talks about uh discussions on social media um who dropping infidelity 5K hit I assume this means that somebody used this exploit to get $5,000 from Fidelity here's another one so this person did an analysis on this on social media and um it appears that uh the approach is to do mobile deposits so you open a new account you do a mobile deposit um it appears using taking a picture of the check I have done um depositing of checks via app for a long time and it is very convenient but um there are security mechanisms in the physical checks your phone only takes a picture of it so a person would not be able to examine the check um video visually and by hand so they might not be able to catch whether the security details are in the check uh it says this scheme proved locative because Fidelity had mobile deposit limits of $100,000 on cash management accounts uh this particular Bank Region Bank uh they reported $135 million in losses due to check BR so this is a really really big deal as Fidelity Fidelity is an absolute monster and I think they have assets either under management or that uh is with them on the order of trillions of dollars regions reported that every Bank was being hit with check fraud and that they were not being singled out um I have two relatives that were hit with check fraud one of them uh put a uh bill payment in the mail and um it looks like the letter or the yeah the letter was stolen and uh somebody did check washing check washing is when you remove the ink for the amount and the pay and then you fill in your own amount and pay and pay to yourself and then you create a new account deposit money in it then once it clears you take the money out so I had one relative got hit for low five digits and one that got hit for high five digits um in both cases they were made whole which means the bank ate the loss or one of the banks ate the loss you have the bank that it was deposited in and the bank that it was withdrawn from uh in this case the relatives uh didn't follow their checking accounts closely um what I do is I get a text and an email for every withdrawal from my bank and credit card account so it means a lot of emails it means a lot of text messages but if somebody does commit fraud on one of my accounts I will know about it in time to contact them so that um the bank doesn't lose out um the other issue uh with getting hit by this um is the bank the bank can freeze your account in the case of a credit card um they will immediately shut down your account and uh mail you a new card uh that's all fine but uh being without a credit card for a week can be uh quite a headache if you use your credit card quite a bit which most people do these days so uh I have two credit cards and um this has only happened to me a couple of times uh maybe three or four times in the past 20 years uh but it does happen um credit cards are a lot more secure than checks checks are inherently insecure door cuz uh it uses paper and ink and the mobile deposits uh aren't as secure as physical paper checks some places recommend that uh if you want to do a deposit you bring a physical paper check into the bank so that they can examine it that works for a bank though it doesn't work for Fidelity because uh they they have Branch offices but I don't think I don't think you can deposit check there they're they're kind of a quasi Bank uh it also a lot of people opened up Fidelity cash management accounts because um a lot of banks don't pay interest on their checking account so if you have the money in a cash management account um and use it for checking your money makes interest as opposed to sitting in a check account not making interest and I can understand that um my personal feeling is uh when it comes to financial stuff I always have a backup uh so if you have uh a checking account maybe have two checking accounts at separate Banks um there's always the possibility that One Bank may have problems or they might go down or you they might close your account or freeze your account uh and you need to pay bills in the meantime so having a second account can help uh a lot of the Fidelity customers are having problems with this because um they make a deposit into their Fidelity cash management account and then try to pay bills with it and if your account gets frozen then you can't pay your bills if you also have a regular bank account um with enough money then you can just pay the bills from that uh I only have uh one checking account but uh I can always I could always have uh I guess one of our kids make the payment for us um I do have multiple credit cards I have two credit cards so if one gets frozen I have access to the other and I I have uh three brokerage accounts so if I lose access to one I can use another for trading so anyway um bring me your Fidelity let's make some bags so this is an interesting case where uh Fidelity is now suspicious of new accounts but this appears to be a scam where somebody has a Fidelity account that's been opened for a while and I guess that's what aged means and they do this fraud for a 50/50 split [Music] um definitely suspicious to me I I have no doubt that this actually happens uh but you risk uh going to jail if you're caught uh for this type of fraud uh I have I have a very hard time understanding why someone would take this risk with the Fidelity account because if you have a Fidelity account you're probably reasonably well off uh but I guess the idea is you scam for Fidelity maybe your account gets frozen because they think somebody else committed the fraud and uh then they restore your account um I'd have to think you'd have to be pretty desperate to try something like this so what has Fidelity done in response well Fidelity is reportedly drop their mobile limits from $100,000 to $1,000 um I guess if you depended on Fidelity to make relatively large um mobile withdrawals uh this could be a real problem uh in a Reddit post yesterday one user reported that FY rep intimated that this probably has something to do with the Chase check fraud cases customers report that mobile limits have dropped from 100,000 to 1,000 making them unable to deposit larger checks so um $1,000 to some people is a huge amount of money and to other people it's a tiny amount of money uh have I ever deposited a $100,000 check um actually yes uh if if you are putting a down payment on a house um if you're changing Brokers uh if you have a stock options uh payout um you could have a check in six figures um I would say in general that it's rare but um it does does happen um some other things would be um an insurance settlement or a lawsuit settlement and I've actually seen cases that that reported on Reddit but uh the vast majority of the checks that I receive are uh under $100 I guess um I have a company that sends me dividend checks in paper form and those are uh uh I think like $60 and uh other Small Checks sometimes you get a rebate for something uh typically under $100 so I don't think this is unreasonable unless um you get these on a regular basis uh is it possible I mean if you're a landlord uh yeah you probably get checks of uh maybe ,000 to $3,000 a month uh I can definitely see that and this would be an absolute headache but if I had if I got these in paper paper form what I would do is uh I'd have a local bank account and i' bring the physical paper checks into the bank and deposit them I guess I wouldn't use the mobile app so this could be a headache and um the case I saw uh on Fidelity yesterday was somebody that had gotten an insurance settlement for $20,000 they deposited it into their account and then once it cleared they wanted to pay bills with it and then Fidelity blocked their account uh when many customers have had their mobile limits drop not all customers reporting the same issue so the limit lar may not may have been more targeted uh so this guy's limit is 500k um some people have dropped it to a th000 uh my get I Fidelity has people with like 10 million uh up to probably hundreds of millions of dollars sorry they have customers with 10 million they probably have some number of customers with hundreds of millions at fidelity if you're in that category uh a lot of this stuff probably doesn't apply uh I do not know what their uh asset uh requirements are uh Fidelity if you have over a certain amount of money Fidelity will give you free Turbo Tax Premiere every year um they may give you other little perks here and there um um nobody knows what the limits are to get these perks but uh they do exist and uh it's possible that there is some limit where they look at you more suspiciously I imagine the amount of time that you've been a customer is uh a factor as well and I'm pointing this out for Fidelity but I believe this applies to every financial institution these days so um I don't think it really matters there's going to be a lot more scrutiny at Banks and financial institutions in general because it seems like um a lot of these types of places are getting hit uh Fidelity that Fidelity dropped their limits may have worked on telegram conversations have immediately shifted to well let's try other Banks um so people reporting this on Facebook um yeah fraud expert at proof thinks uh this will not end soon um it's a wakeup call to improve security maybe maybe they need to do something something about checks I checks are inherently insecure and uh I don't know what a good fix is but um the solution may be just to require people to go into the physical Branch to deposit checks or have some other secure way to do it um this is one that I like this morning a post on a Reddit group says it all Fidelity dead open a Charles Schwab account and hit me up 5050 so they're moving on to Schwab uh I suspect they'll move on to erade and uh the other the other big brokerages um the fraud stuff is really crazy I guess I shouldn't be surprised um people are basically using social media to spread to other people how to do fraud and uh I'm kind of disappointed in society but that's the world we live in today