|04-26-2012, 01:02 PM||#1|
Join Date: Oct 2002
Normal banking behavior and AVS mismatch
I saw several people got up on arms re Sara's "banking" thread. The explanation is simple and I didn't want it to get lost in the sea of silly argument.
It's an AVS mismatch that the merchant mistook for a decline. It happens pretty often and it happens exactly as Sara described, being automatically refunded ten days later. Everything about the story exactly matches an AVS mismatch that the merchant treated as a decline. That's pretty common when shipping physical goods - you don't want to ship something to an incorrect address.
Actually though, your thinking is it's a $20,000 loan. The federal funds rate is 0.15%, meaning for the bank to borrow $20,000 for ten days costs them $0.08. Yes, eight cents to borrow $20,000 from another bank. So really it's eight cents they'd stand to gain by committing large scale fraud.
let's look at that in figures:
Do commit fraud for:
when you have:
No, when the bank is a little short they just write a $10,000,000 check on their federal reserve account. Borrowing $10 million costs them $41.
You want to know what DID happen? An AVS mismatch, in all likelihood. Some merchants treat an AVS mismatch as a decline, but it's not. ePassporte used to do that. When the AVS doesn't match, the transaction will be flagged as such but it's still a perfectly valid transaction and the money is held out of your account. The merchant sees it's marked as mismatched AVS and THEY decided to ask you to check the address. (Or they didn't see it at all, just misplaced it.) Then when they neither complete the charge by marking it shipped nor refund it, ten days later the bank automatically refunds it.
Last edited by raymor; 04-26-2012 at 01:04 PM..