Fidelity locking down tons of CMA accounts due to possible fraud

[audreyh1]

I use a Fidelity CMA for all normal banking functions. I've seen no change in the normal flow of funds in and out. I use mobile check deposit once per month to deposit a recurring check. I deposited the check a few days ago and the funds were available the next day. I just checked and my daily check deposit limit is $500K, same as always. Nothing to see here.

It could be that Fidelity lost some money with this situation. Since Fidelity is a private company we may never know,

 

[MarieIG]

I was able to log into the Fidelity CMA without issues. However, one of my banks does not appear to know who I am. Being locked out of accounts seems to be a pattern with me lately . . .

 

[jazz4cash]

The main Fidelity action I believe was to limit mobile deposit to $1000 on targeted CMA accounts. Thus the social media suggestion to now move on to Schwab, ha ha.

I’m not clear on there being any billpay problems at Fidelity. Lots of bad actors out there trying to max out FUD.

I don’t understand how or why any of it works. AFAIK Fidelity never had any software glitch enabling immediate access to deposited checks. Fidelity does not have their own ATM network. Restricting withdrawals/transfers for several days as they normally do should have thwarted major fraud. Perhaps lowering daily limits on certain accounts was their way to say ‘don’t even think about it’

Will there be an automated update some day that disables all these protections?

 

[RetiredHappy]

I use Fidelity CMA to pay a couple of bills online and have never encountered issues.

 

[old medic]

Got an Email saying they locked mine down.... funny I dont have one.....

 

[audreyh1]

I don’t understand how or why any of it works. AFAIK Fidelity never had any software glitch enabling immediate access to deposited checks. Fidelity does not have their own ATM network. Restricting withdrawals/transfers for several days as they normally do should have thwarted major fraud. Perhaps lowering daily limits on certain accounts was their way to say ‘don’t even think about it’

Will there be an automated update some day that disables all these protections?

They used mobile deposit. I’ve often had funds showing as available the next day.

 

[rkser]

This write up by Harry Sit, a boglehead suggests PUSH transactions -

Follow This Rule to Avoid Long Holds and Account Restrictions

Check deposits and ACH pulls increase the chances to get your account restricted.

thefinancebuff.com

 

[audreyh1]

This write up by Harry Sit, a boglehead suggests PUSH transactions -

Follow This Rule to Avoid Long Holds and Account Restrictions

Check deposits and ACH pulls increase the chances to get your account restricted.

thefinancebuff.com

I suppose that is one way to handle it, but in his example, Bank of America also charges fees for transfers to outside institutions.

With Fidelity I only do ACH pushes or pulls from already linked bank accounts that also have our names on them. These accounts have been linked and active for years. In general I don’t like to push funds from the other institutions because many of them have tiny limits on transfers or fees.

I believe the problem the opening example illustrated was depositing a large check in a brand newly opened account. Maybe not the best first move. Depositing checks like this in already established active accounts is probably the better way to handle it.

 

[mrfeh]

Deposited a 5 figure check to Fido last week without issue.

 

[thefinancebuff]

I suppose that is one way to handle it, but in his example, Bank of America also charges fees for transfers to outside institutions.

Bank of America used to charge fees for transfers to outside institutions. Not anymore.

 

[audreyh1]

Bank of America used to charge fees for transfers to outside institutions. Not anymore.

Thanks for the correction. Had no idea they had dropped that fee.

 

[jazz4cash]

The OP says ‘tons of accounts’ but I don’t recall seeing a number from a credible source. Fidelity’s lack of explanation is understandable but adds to the frustration. I wonder if other media platforms have so many complaints. Redit seems to be the hub for this issue but I don’t use any of the others.

 

[Spock]

This write up by Harry Sit, a boglehead suggests PUSH transactions -

Follow This Rule to Avoid Long Holds and Account Restrictions

Check deposits and ACH pulls increase the chances to get your account restricted.

thefinancebuff.com

This sounds backwards to me.
I would think PULLs would be less risky for the institution receiving the funds. The user has to log into the receiver to initiate the transaction vs. "who knows who initiated a push".
Personally I almost always do pulls as the $ seem to get there quicker vs. the sender dragging their feet to process the withdrawal/push.
Lately I trigger almost all transactions from Fidelity as the transfer limits are higher... WF fluctuates but last time I tried to push from WF the transfer limit was only 3K.

 

[teej1985]

Bank of America used to charge fees for transfers to outside institutions. Not anymore.

A rare TFB sighting

 

[dmpi]

People are going to get banned from banking. This isn't going to end well for them.

 

[CaptTom]

They say they're limiting mobile deposits to $1000 on targeted CMA accounts. My first thought was "Which accounts are they targeting?" I imagine these might be low-balance or newer accounts. This would explain the posts here reporting no problems with their accounts.

Seems like run-of-the-mill fraud and internet click baiting to me. Nothing to see here. Except maybe if Fidelity failed to process legitimate automatic payments. That would tick me off, and doesn't really seem like it would solve the problem anyway. I don't have any automatic payments from Fidelity so I guess I won't find out.

 

[audreyh1]

From what I’ve read since on Reddit many people complained that Fidelity was blocking legit automatic payments in some accounts after a mobile deposit even many weeks earlier - payments that had been regularly scheduled for years. The supposed reason is because once transfers out after a deposit had been denied, fraudsters moved to trying billpay or direct debit instead. The problem seems to be the automatic fraud detection systems are using a very broad brush so legit transactions are getting flagged. Tough situation IMO. If you haven’t made a mobile deposit within say six weeks and you aren’t using billpay or direct debit you’re probably never going to get flagged so yes it will seem like nothing burger.

We rarely do mobile deposits but it happens that we had a couple of mobile deposits in August - printed checks from a business, which went through as expected. But I have a regularly scheduled direct debit coming up next week. I’ll probably find another way to pay it this time. Plus we’ve been traveling without direct cellphone access, WiFi only. I’ll probably wait until returning home to access my account - I don’t need to. And I should have cellphone access in a couple of days and can take care of other business.

 

[rkser]

Unrelated to this fraud & locking up of the Fidelity CMAs.

I IMAGINED IF, a big IF

Fidelity( or any other Bank/Broker) locked up our accounts &

I did not have access to any of our accounts & money what would I do ? That is all we have in retirement & there is no new money coming in.

What would or could I do ??

Fidelity is a great broker to be with & I think it does all in its power to keep security its number one priority. We have been very happy with Fidelity.

We have not been affected by this CMA restrictions.

 

[Spock]

Unrelated to this fraud & locking up of the Fidelity CMAs.

I IMAGINED IF, a big IF

Fidelity( or any other Bank/Broker) locked up our accounts &

I did not have access to any of our accounts & money what would I do ? That is all we have in retirement & there is no new money coming in.

What would or could I do ??

Fidelity is a great broker to be with & I think it does all in its power to keep security its number one priority. We have been very happy with Fidelity.

We have not been affected by this CMA restrictions.

1. "Never put all your eggs in one basket" Have multiple accounts spread across at least 2 institutions.
2. Have cash in your drawer/basement/buried in the backyard for emergencies (like groceries) when "the system" won't let you access your money for whatever reason.
This allows you to at least function while things get ironed out.

Just wait until AI is fully unleashed in both the fraud detection AND customer service depts.

 

[audreyh1]

Unrelated to this fraud & locking up of the Fidelity CMAs.

I IMAGINED IF, a big IF

Fidelity( or any other Bank/Broker) locked up our accounts &

I did not have access to any of our accounts & money what would I do ? That is all we have in retirement & there is no new money coming in.

What would or could I do ??

I think that I will always have two other financial institutions so that in some emergency situation I am able to to access funds immediately if needed from another source.

I know of cases where Fidelity accounts have been locked due to detected login credentials compromise, and it took a while to sort.

 

[MichaelB]

I think that I will always have two other financial institutions so that in some emergency situation I am able to to access funds immediately if needed from another source.

So do I, but this last year or two have been especially challenging for that because banks still pay zero interest on demand accounts.

 

[Sunset]

So do I, but this last year or two have been especially challenging for that because banks still pay zero interest on demand accounts.

I view my readily available funds as not likely to earn interest.

I have a few hundred in cash at home, as I nearly always use CC's it seems to just sit unused, with 0% interest.

Use an ally online account as a bank, it pays 4.2% for the savings account. So keep maybe $10K there as a backup. More if they have a good paying CD (they have low penalties for breaking various ones).

I also have a brick and mortar bank and yes it pays 0% for the checking account, so I only keep $8K -> $10K in there and use it to pay my CC bills, etc. I transfer in money every couple of months or as needed from a brokerage account.

 

[audreyh1]

So do I, but this last year or two have been especially challenging for that because banks still pay zero interest on demand accounts.

One of my separate banks is a high yield savings account. It pays a decent rate, not always the highest rate, but sometimes it is the highest. I only keep about a month’s worth of spending in checking.

At the beginning of each year I move at least 2/3 of the year expected spending to this savings account. The remainder is often invested in short-term CDs.

In an emergency I could also pull some from IBonds.

 

[jazz4cash]

Unrelated to this fraud & locking up of the Fidelity CMAs.

I IMAGINED IF, a big IF

Fidelity( or any other Bank/Broker) locked up our accounts &

I did not have access to any of our accounts & money what would I do ? That is all we have in retirement & there is no new money coming in.

What would or could I do ??

Fidelity is a great broker to be with & I think it does all in its power to keep security its number one priority. We have been very happy with Fidelity.

We have not been affected by this CMA restrictions.

I keep thinking I should use a few thousand bucks open an account at the local bank on main street with no electronic access that I could bike to if necessary

 

[Marc]

I still have all assets at Fidelity. Made mobile deposit late August and I think a half dozen automatic payments have gone through without a hitch this month; still, I probably should open a brick and mortar account; been over 15 years.

Marc