This is why new deposits are held at some institutions

[jebmke]

My band only allowed me to withdraw funds immediately if it was my paycheck, which I had to identify with the bank in advance. I no longer get any paychecks. Even deposits from my Schwab account take a couple of days.

Are you saying that the transfer takes a couple of days or it takes a couple of days to release the funds in the bank?

Earlier this week I submitted a transfer on the Vanguard site just before lunch. The funds hit my bank (USAA) around dinner time. It was not a large ACH, $25,000. I never looked to see if USAA considered them available funds but I did get my usual text from USAA that a deposit was made.

 

[jazz4cash]

I also think there should be criminal charges for JPM. They are not fulfilling their fiduciary responsibility when they allow withdrawals on checks that have not cleared. As you say, the customers end up paying.

So you think they intentionally permitted unlimited withdrawals on checks that had not cleared? I thought it was a software glitch but you could make a case for a suit based on negligence I guess. I assume limited availability for any check deposit even if I have funds on deposit to cover.

 

[jazz4cash]

I have a colleague whose 17-year old daughter did this. She's a good kid, but just saw a clip on TikTok and thought she would try for the "free money" without thinking it through. TikTok just short-circuits the brain. (She did pay it back immediately when mom found out).

What I did not appreciate until looking back at this today was the scale - I assume these fraudulent withdrawals were $200-$500 cash at ATMs. This is just nuts:

I am extremely skeptical. That’s $145k per case. I have a feeling they won their case but the money is in the wind never to be recouped.

Last October, the bank filed four federal lawsuits, and, as of Monday, has won them all, recouping about $580,000 of the $660,000 it sought out,

 

[audreyh1]

Are you saying that the transfer takes a couple of days or it takes a couple of days to release the funds in the bank?

Earlier this week I submitted a transfer on the Vanguard site just before lunch. The funds hit my bank (USAA) around dinner time. It was not a large ACH, $25,000. I never looked to see if USAA considered them available funds but I did get my usual text from USAA that a deposit was made.

The transfer has completed, but the funds are being held to make sure that the source bank doesn’t walk back the check or transfer due to fraud. It can take much longer than the transfer time to detect a fraudulent check.

In an ACH transfer, the institution that initiates a transfer out (push) is the one responsible for ensuring that the funds are there. Once transferred out those funds are committed. However, if an institution does a pull of funds from another bank or deposits a checks written on another bank account (check deposit), they are still subject to these funds pulled back in case of detected fraud. So they are vulnerable until the check is verified or the validity of the source funds are verified.

One suggestion for Fidelity accounts has been to only push funds from other accounts instead of having Fidelity pull them. This would avoid a hold on deposits. I don’t use this approach as I prefer Fidelity be the central clearing house, not my other financial institutions. My cash flow can handle waiting for held funds if necessary.

Over the decades financial institutions have been getting very responsive in terms of availability of funds. Too responsive in some cases. They ultimately got taken advantage of by criminals, rank amateurs in some cases who were pretty stupid. I’m glad Chase is going after them.

 

[jebmke]

The transfer has completed, but the funds are being held to make sure that the source bank doesn’t walk back the check or transfer due to fraud. It can take much longer than the transfer time to detect a fraudulent check.

In an ACH transfer, the institution that initiates a transfer out (push) is the one responsible for ensuring that the funds are there. Once transferred those funds are committed. However, if an institution does a pull of funds from another bank or deposits a checks written on another bank account (check deposit), they are still subject to these funds pulled back in case of detected fraud. So they are vulnerable until the check is verified or the validity of the source funds are verified.

One suggestion for Fidelity has been to only push funds from other accounts instead of having Fidelity pull them. This would avoid a hold on deposits. I don’t use this approach as I prefer Fidelity be the central clearing house, not my other financial institutions. My cash flow can handle waiting for held funds if necessary.

Over the decades financial institutions have been getting very responsive in terms of availability of funds. Too responsive in some cases. They ultimately got taken advantage of by criminals, rank amateurs in some cases who were pretty stupid. I’m glad Chase is going after them.

Yeah; I did a small mobile check deposit to USAA and they only released the first $10K right away. I never went back to see when the rest got released. Seems like banks will honor a small amount and the verify the total and then release the balance.

 

[audreyh1]

Well they certainly needed to get smarter about making funds from deposits available. Banks used to be very strict about this.

 

[Walt34]

The check fraud scheme

https://www.cnbc.com/2025/04/16/jpmorgan-chase-infinite-money-glitch-bank-lawsuits.html

This is nothing new, it used to be call "check kiting". What got to be new is banks going after perpetrators with criminal charges instead of letting it go because it takes a lot of employee's time (and therefore bank's money) to prosecute.

 

[copyright1997reloaded]

Well so much for "Check 21" which was designed to provide faster clearing benefits.