The Big Con: No Matter the Form, Easy Money Is Still a Fraud

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P.T. Barnum purportedly proclaimed that “There’s a sucker born every minute”, though there is no proof that he actually said it. Whether true in Barnum’s time or in today’s social-media era, however, the phrase describes those gullible enough to believe anything, even when their better judgment (if they possess any of that) tells them otherwise.

Now comes a story about TikTok, where 40 percent of young adults get their news these days. Recent news sources report TikTok videos portraying people believing they could get “free” cash from Chase Bank ATMs. These videos showed people depositing checks for large sums of money at Chase ATMs, and then making withdrawals for smaller yet substantial amounts, leading them to believe they had discovered a computer glitch to take advantage of. One video viewed over 100,000 times shows a young woman calling her mother and telling her she could get $40,000 to $50,000 out of her Chase account by depositing a check and taking advantage of the “glitch.”

Chase normally allows customers to withdraw a portion of deposited checks before the full check amount clears, but a technical error allowed customers to withdraw all of the funds from a check before it had cleared. Chase says that this error existed for a few days before being quickly fixed.

If this sounds like fraud, it is. Such schemes in earlier times were called “check-kiting”, when someone takes advantage of bank float to make use of non-existent funds. It has been illegal by both state and federal law for many years. Check-kiting is much less common today than in prior times—-not because bank customers are more law-abiding today but because the elapsed time from check deposit to check clearance has become significantly shorter over time. […]

— Read More: mises.org