Qchex Shut Down, Scammers Everywhere Weep

ArsTechnica reports that a judge has ordered Neovi, the company behind Qchex, to immediately stop offering their service, which allowed people to create and send checks drawn on any bank so long as they provided the account info. As you can imagine, this led to abuse by scammers who would use Qchex to create fraudulent checks.

The company can’t resume business until it puts in place a verification system to help prevent fraud, and gives up all the money it has made over the past couple of years.

Qchex says that verification is the responsibility of banks, and that customers who were ripped off were often victims of their own stupidity or greed:

Numerous consumers are involved in disputes related to check payments every year. Often the consumers become victims of their own greed, carelessness or fraudulent schemes. Some consumers were affected negatively from Qchex users and blamed Qchex – per the Federal Trade Commission (FTC).

Every year millions of counterfeit, fraudulent and disputed checks enter the banking system from a myriad of sources. Qchex made it easy for banks to recognize checks created with the service by printing its mark on each document. Banks complained to the Federal Deposit Insurance Corporation (FDIC) about losses caused by cashing fraudulent checks created by Qchex software users. Qchex was blamed for actions of its users abusing the system and banks irresponsibly cashing checks created by Qchex software users. A public campaign was initiated.

We’re not sure who Qchex is trying to win over with that statement, but okay. What they’re really saying, however, is that the responsibility to validate the checks lies with the banks, not with a third party system that merely prints the checks. The FTC thinks otherwise, and filed the lawsuit that led to the company’s shut down after they refused to agree to a list of demands that would have implemented a verification process.

(Thanks to Robert!)
Qchex statement [Qchex]

Comments

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  1. InThrees says:

    They are correct though.

    Legally you can write a check using a napkin. Legally you can print your own checks.

  2. April Nicole Caldwell says:

    Wow. As a recent victim of check fraud, the fact that qchex thinks they are not responsible is ridiculous. When I order checks online, it is a very involved process. Why should it not be the same if you are printing just one?

    Check out their site. The section titled hypothetical scenario is awesome.

    • ScottRose says:

      @April Nicole Caldwell:

      Err, so if someone washes one of your checks that they stole from a mailbox it’s [Your Bank]’s fault for selling you those pesky checks in the first place?

      It’s basically the same thing, Qchex just make the “steal-your-check” part easier. But it’s still the responsibility of the person doing the stealing.

      • Tito151 says:

        @ScottRose: The fact that they are making it easier for scammers is the very reason why the qChex site should be required to use some kind of verification. What’s a reasonable thing that a person could do to prevent this from happening to them? Sometimes you have to pay a bill with a check. You can’t use debit/charge cards or cash everywhere.

        • ScottRose says:

          @Tito151:

          What’s a reasonable thing that a person could do to prevent this from happening to them?

          To prevent themselves from being the victim of someone using their bank info on Qchex? Not give their bank info out on phishing websites.

          But as other commenters pointed out, a check-forger could just print a check with your (or my) info on it and cash it with a fake ID. Or they could order checks with your info from Costco or some such. I agree that Qchex makes it easier to commit this kind of fraud, but not that Qchex is responsible.

          Parking my car on the street means it’s easier for a thief to steal it rather than putting it in my garage, but is it my town’s responsibility for allowing street parking if my car gets stolen?

          • Tito151 says:

            @ScottRose:
            I said a reasonable prevention, not a stupid/obivous one…
            Anyways, assuming the mentioned garage has security (b/c around here it seems more likely for something to get stolen from your car in a garage than in the street), you probably wouldn’t be mad at the town, but you would want the town’s police to be doing something about it, right? If aforementioned town’s local store publicly sold slim-jim lockpicks and just said ‘Don’t do anything illegal with this’, don’t you think that would be considered irresponsible? qChex is being irresponsible by letting anyone make checks without any kind of verification.

  3. m4ximusprim3 says:

    The statement is nice, but it’s just saving face.

    They know that if they implement a verification process, the majority of their business (which is fraudulent) would dry up, and theyd go under anyway. I suppose it’s better to go down pretending to be indignant than fold from lack of revenue.

  4. MrsLopsided says:

    How are they different from ordering checks from Sam’s Club or Costco? Costco has check printing online.

  5. zarex42 says:

    Qchex is absolutely correct. Purchasing (or creating) checks is absolutely trivial, and it’s a huge mistake (and deceptive) to try to create and enforce security measures in this manner. It is 100% the bank’s responsibility to check the validity of the check.

    As for them returning any $ they made, it’s totally unjust, as I’m sure nearly all of it is entirely legit.

  6. FatLynn says:

    If I have this correct, the recipient prints the check. Therefore, it is not signed. Why would my bank cash a check that wasn’t signed?

    • Kimaroo - 100% Pure Natural Kitteh says:

      @FatLynn: I’d imagine it works similar to when you use online billpay through a service.. you don’t actually sign the check yourself but the company gets a paper check on the other end. (Unless they’re set up to electronically recieve payments.)

      I use online billpay to send my dad money when I owe it to him.. I never sign those checks but they go through just like normal ones.

  7. John Wells says:

    It’s not this company.

    They have a good business model that enables people that must use a check once in a while to quickly do it. (Without printing a whole book of them)

    It is the banks job to verify this and I cannot believe the judge sided with the FTC.
    Are they now going to say you may only purchase checks form one vendor the government approves?

    I’m sorry but this is Bull Poop!

    • jimmy37 says:

      @John Wells: How about you giving me your particulars so I can make an ACH withdrawal from your account? It’s bad enough that banks don’t have send checks back to a bank to get cashed. All they have to do is send the bank info and !MAGIC!, the check is cashed.

      • zarex42 says:

        @jimmy37: Account number and ABA code (his “particulars”) are not secrets; they’re on every check in the world. You need authorization for an ACH.

  8. Anonymous says:

    So when will the FTC close down the companies that produce software that allows you to print checks on blank check stock, or the companies that produce blank check stock.

    Hell, maybe they should go after the paper mills since they are the ones producing the product that can be forged.

    Come on…

  9. bohemian says:

    I have had one run in with qchex in my life. It was some scammer wanting me to send an expensive piece of equipment to Nigeria using a NY woman’s information. I knew it was fraud right away. I did bother to track down the actual person in NY. She said her identity was stolen over a year ago.

    So yea, qchex is fraught with scammers and even the Nigerian scammers are in on the action.

  10. smythe says:

    I don’t think you all know how this scam work… You can print ANYTHING from qchex, meaning I can put a fake name on a check with YOUR account number and use it as if it was my own check.

    Think Craigslist, your selling something, a person shows up to buy it and hands you a check. You just got screwed.

    Of course you can always check liscences, I mean those are never faked.

    Same thing goes for any store. Fake check + Fake ID = Free crap. Well, not free to you or the bank if they’re using your account number.

    • ScottRose says:

      @smythe:

      True enough, but you’re assuming I’d be stupid enough to take anything but cash in an in-person CL trade. :)

    • zarex42 says:

      @smythe: You don’t understand how easy that is, regardless of qchex. They’re not guilty of anything, and don’t contribute to scams at all. This is 100% BS from the FTC.

  11. downwithmonstercable says:

    There must be some fundamental difference here as to why Q Chex would be targeted. They are synonymous with mail fraud and Nigerian scams. Drawing up checks may be a legit thing to do, but there have to be some kind of serious flaws or lack of accountability/verification with their “business model”.

  12. chrisjames says:

    What’s this mean?

    Qchex made it easy for banks to recognize checks created with the service by printing its mark on each document.

    So, it was the bank’s responsibility to discard any Qchex checks? Why is it important that banks know the check source if not because it has a reputation for assisting check fraud? Are they shooting themselves in the foot here?

    • downwithmonstercable says:

      @chrisjames: Maybe they hoped to use that as an out someday because they new that while they technically had a legit business, it really looks more like a business created to cater to fraud. Kind of like those lifesized dummies marketed to people to look like they had a 180lb male companion. But really, they were subtly marketed towards putting in your car to use the carpool lane while you were alone. Thin front for a shady purpose.

  13. jmndos says:

    Qchex!?

    What about Deluxe ?

  14. jblack says:

    I have to say that I agree with Qchex. A check is an order from me, to the bank, to pay. It’s their responsibility to ensure that the signature on an alleged order by me to pay someone matches the signature that is on file.