Terrorists Hate High Monthly Interest Payments

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Via movie critic extraordinaire and frequent Hit & Run commenter Alan Vanneman comes this tale, originally from the Providence Journal, about how homeland security intersects with paying down credit card debt. Walter and Deana Soehnge are retirees who tried to pay off $6,522 on their JC Penney MasterCard. When the balance didn't go down, they called to find out what was up:

They both learned the same astounding piece of information about the little things that can set the threat sensors to beeping and blinking.

They were told, as they moved up the managerial ladder at the call center, that the amount they had sent in was much larger than their normal monthly payment. And if the increase hits a certain percentage higher than that normal payment, Homeland Security has to be notified. And the money doesn't move until the threat alert is lifted.

Whole bit here.

Reason looked at the largely ignored money provisions of the Patriot Act back in 2003 and asked whether they help us catch terrorists. And we looked into the upside of a database nation here.

NEXT: But Seriously, Brent, When Do Race Bannon and Dr. Quest Get Their Pink Triangles?

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  1. If Americans can’t get rid of their debts and stop sending huge interest payments to big corporations, then the terrorists have won!

  2. CORRECTION:

    If Americans can get rid of their debts and stop sending huge interest payments to big corporations, then the terrorists have won!

  3. Uh-oh — I just did this, to the tune of about $5,500 on two different cards. I hope I don’t get a call from DHS.

  4. Interfering with payment? That sounds actionable under several state laws.

  5. In all seriousness, the PATRIOT Act does act as though credit card companies are an important anti-terrorism tool. I’m fed up with my bank, so I tried opening an account at a new one but was not allowed to do so–all I had in the way of ID was a driver’s license, you see, and new banking laws require two forms of ID: either a license and a passport, or a license and a major credit card.

    You know all those news stories you hear about credit-card companies screwing up and sending cards to toddlers and family pets and houseplants? That’s okay; they’re still considered a viable and required form of national-security identification. If we let people pay off their credit cards early, or not have one at all, THE TERRORISTS WILL WIN!!

  6. My credit card is from a credit union in Massachusetts. In Mass, if you interfere with a credit payment, in ANY way, you get your hands cut off. It was a big scandal in the 90s. There were clearing houses holding checks at the request of local banks trying to hold on to funds until the 1st of the month.
    I made a few much-larger-than-average payments last year and they went through without incident.

  7. Uh oh. I paid off my car ahead of time.
    Should I expect a midnight knock on my door?

    “It was only an Altima, Officer. An Altima!”

  8. You know, when a terrorist is preparing to die and go to Paradise, the highest priority on his list is to pay off the balance due to those Western usurers. So obviously this is a great tool for spotting iminent attacks!

  9. Another thought occurs: even assuming that monitoring credit cards was somehow a helpful anti-terrorism tool, wouldn’t it make more sense to monitor charges rather than payments? If the Soehnges had used their JC Penney card to buy $6,000 worth of bomb-making chemicals, it’s not as though the chemicals would fail to work until they paid off their balance, after all.

  10. I wonder if JC Penney is charging them interest and fees while DHS holds up the payment.

  11. What a load of succotash! See, this is what I’m talking about. It isn’t about protecting us from terrorists. Its about letting your bank hold on to your money a few extra days.

  12. Ahh, the banking provisions of USA PATRIOT…making your bank spy on you because if we don’t we’ll get reemed (no lube) by the OCC.

  13. Jennifer: If you can build a bomb out of a Golden Girl’s jacket, a pencil skirt, and a maidenform bra I’d be pretty impressed. Sears, however, probably has many explodable supplies.

  14. A friend of mine told me that there is a name amongst creditors for people who pay off their credit cards each month. They call them “deadbeats”. I guess they can add “terrorists” to their lexicon now.

  15. Timothy, I’m too furious to even joke about this. I’m still waiting for some government stooge to explain to me some plausible chain of events that starts with “Jennifer, a longtime resident of Connecticut with an almost twenty-year uninterrupted history of holding accounts at various financial institutions, opens a bank account using only her driver’s license as proof of identity” and ends with “As a result, New York vanishes in a mushroom cloud.”

  16. Jennifer, you just don’t know your own power, and “they” want to keep it that way. 🙂

  17. Jennifer: If it makes you feel any better, your bank hates it as much as you do. It’s just one more thing we’re required to do by the damnable government that costs us money and customers. There are certain industries that are “high risk” for money laundering (as decided by the OCC) that we have to monitor more closely at great expense, to the point where it isn’t really profitable to take on new customers from those sectors. Lawyers and Accountants are on this list now, in addition to car dealers, check cashing establishements, etc.

    It’s our job, as far as the regulators are concerned anyway, to catch “money laundering”, which is so damn broadly defined it makes my head spin. I’m glad I’m not our Risk Management Officer, that’s for damn sure. If the government doesn’t want people committing crimes, they should do the leg work. Why the hell do we care, and why on Earth should it be our responsibility to bear the responsibility for the actions of others and the costs of catching them at it?

  18. Why the hell do we care, and why on Earth should it be our responsibility to bear the responsibility for the actions of others and the costs of catching them at it?

    And another question is: How can that sequence of events that starts with “Jennifer opens an account with no ID but her driver’s license” and ends with “New York goes nuclear” be completely averted by “Jennifer opens an account with no ID but her driver’s license and a credit card“?

    I just got a VISA debit card from my current craphole bank. I wonder if THAT would count? It does have the sacred VISA name on it, after all, and anybody who has a driver’s license and a piece of plastic with the word “VISA” on it can’t possibly be a terrorist.

  19. Cash = privacy.

  20. They call them “deadbeats”.

    That’s charming. But I bet they’re called worse.

  21. Well…you see…umm…it’s possible to, like, fake driver’s licenses and stuff…but nobody has ever been able to get a credit card in someone else’s name. Ever.

  22. Timothy, since you are apparently in the banking biz, here’s a sincere question. You know how the law says banks have to make a big deal about, and report to the government, any transaction over ten thousand dollars? I have a low multiple of that in my current account, so whenever I AM able to open a new account and then close out my current one, will that cause me any trouble, do you think?

    Bear in mind that every penny in that account can be traced to various legitimate paychecks I’ve earned and deposited over the last three years; it’s not like one day I had only a hundred bucks and then the next day I deposited ten grand in cash or anything.

  23. Will any of our usual suspects show up to explain how this is No Big Deal?

    Anybody?

  24. Maybe somebody will show up and explain “Anybody who has worked in the field of intercepting terrorist finance can tell you that it is necessary to exploit unusual patterns of transactions to counter the sophisticated strategies exploited by these non-traditional military groups. It’s clear that the complainers have no experience of this field, and no real appreciation of the stakes involved.”

  25. They call them “deadbeats”.

    Well, truth told, folks paying off the balance aren’t profitable to the credit card company, and might in some cases cost them money, one can hardly expect that the card issuers would have a high opinion of those folks.

    That said, the whole consumer credit card industry is a little sleazy.

  26. Timothy-

    You’ll be pleased to know that a series of unforeseen expenses has kept my credit card balance hovering at the same level for several months.

    Just doing my part to not be a deadbeat.

  27. Well, truth told, folks paying off the balance aren’t profitable to the credit card company, and might in some cases cost them money,

    Merhcants have to give credit-card companies a small percentage of every transaction done with the card. The companies would still make money even if every single cardholder in the country paid off their balances in full each month.

  28. Jennifer,

    Yeah, I don’t buy their sob stories either. Bloodsucking vampires. (See, worse than “deadbeat”.)

  29. if i were a sophisticated terrorist trying to bank without drawing attention from the government – why wouldn’t i just use a bank in switzerland or something – a place with more privacy?

    maybe some banking folks here can shed some light on the mystique of swiss banking. perhaps it’s not all it’s cracked up to be.

  30. Jennifer:

    Depends how you move it:

    Cash transactions of $10,000 or greater in one day require that the bank file a CTR (IRS Form 4798). I think (I don’t rightly know and none of the Treasury Management guys are around at the moment), that this includes negotiable instruments (checks) of that amount as well.

    If the bank suspects a crime (or possible crime) or the activity is highly unusual for the account and involves $5,000 they may be required to file a Suspicious Activity Report with the Financial Crimes Enforcement Network of the Treasury Department (FinCEN). The legal requirements are only for suspicion of crime or possible crime, but many banks have their own policy on suspicious activity reporting, and I’m not familiar with all of the details.

    Banks are also required to keep records of cashier’s checks, traveller’s checks, and money orders purchased with more than $3,000.

    I’m also unaware of whether or not banks have to report large account closures, so you might be able to close your account then deposit the money in cash slowly over a few days. IIRC there are certain requirements for reporting large wire transfers, but I think that’s the same CTR form.

    And that’s all the research I’m going to do right now because it’s my birthday and I have actual work to do :-).

  31. Great. When I do manage to open a new account and close out my old one, I’ll make an announcement to that effect here and on Grylliade. And then, if you never see me post again, you’ll know what happened.

  32. Jennifer: Well, then let’s say less profitable than balance holders.

    I don’t buy their sob story either, and consumer credit cards are easily the shadiest aspect of lending (my employer doesn’t offer consumer credit cards for this reason).

  33. c’mon. it’s no big deal.

    dontcha people know there’s a WAR going on?????

    all of these ad hominems (sic) lead to a slippery slope of a false dichotomy.

    this is going after the hause of saud, you font faker you.

    (has anybody tried paying cash at the post office lately???)

    what would happen if we mated amazing and juanita? that’s a poser. hmmmmmmmmmmmm.

  34. “A friend of mine told me that there is a name amongst creditors for people who pay off their credit cards each month. They call them “deadbeats”.”

    After reading that, I immediately logged on to my credit card account and paid off the entire balance on my card. (A whopping twenty-some-odd dollars.)

    Stick it to The Man, exercise financial restraint!

    On a more topic-related note, I’ve taken out what is (for me) rather large amounts of cash from my account in the last couple of weeks. Suffice it to say, I’m curious as to whether this has gotten me flagged.

  35. I think credit cards are rather convenient, and banks aren’t being “shady” by offering them so much as really, really over-agressive. I can’t quite believe your bank is passing up an opportunity to make easy money for the stated reason – unless you work for Whole Earth Bank or something.

  36. Rhynwun: There are other considerations, for sure, but as I understand it the decision really was an ethical one. Considering the nature of the company as a whole, I think that makes a lot of sense.

    I don’t really have anything against credit card companies, but there is something a little unseemly about the way they conduct themselves. The over-aggressive marketing, the ever-fluctuating agreement, the hidden terms and conditions, the random fees…etc.

    Standard Libertarian Disclaimer: My displeasure with the way some of these companies conduct themselves in no way implies that I think the government should do anything about it, that I don’t think the companies have a right to conduct things in this manner, or that I don’t understand economics.

  37. “or that I don’t understand economics.”

    Timothy: no worries. You’ll still be accused of that by some.

    cheers!

  38. VM: To be expected, I guess a job as an analyst and an economics degree just aren’t enough for some people!

  39. Well, it is the internet. The only people who aren’t experts are the ones without a connection.

  40. Exactly, mediageek.

    Since I have internet access, I obviously know everything that there is to know about typewriters and Valerie Plame’s job. That’s just obvious, right?

  41. Considering the nature of the company as a whole, I think that makes a lot of sense.

    Looks like any other bank to me, but I’ll take your word for it 🙂
    Anyway I really don’t see anything more shady about credit than a myriad other businesses – but I’m a cynic so I pretty much expect it.

  42. Rhynwun: Fair enough, I could read you from the employee propaganda handbook, but then I’d have to kill you.

    I am an expert on nothing, well, I know how to keep me happy. I guess that makes me an expert on self-satisfaction.

  43. Strangely, I can’t seem to get any satisfaction.

  44. Timothy: I’m fairly sure my employee handbook says the same things – I don’t buy any of it.

    I guess I’m an expert at “one-handed” “self-satisfaction”, too.

  45. This is sort of off-topic, but has anyone else noticed that the military now has a unit devoted to reviewing civilian blogs for their content and which “engages bloggers who are posting inaccurate or untrue information, as well as bloggers who are posting incomplete information. They extend a friendly invitation to all bloggers to visit the command’s Web site.”

    http://www.defenselink.mil/news/Mar2006/20060302_4370.html (please note – US DOD official website)

  46. Rhywun: Sometimes, and this is proprietary so don’t go spreading it around, I use both hands.

  47. I’ll be giving this one a trial run in few months. As I finish grad school, my funding has been dwindling and I’ve been leaning heavy on the credit cards while paying the minimum payment.

    That said, in a few months, I’ll have effectively quadrupled or better my monthly income. Unless the temptation to drink, gamble and squander that extra money away overtakes me, I plan to pay of my credit cards with a series of monthly payments 5 to 10 times larger than what I’ve been paying the past few months.

    I’ll keep you posted if I can manage to rattle off a comment before my door gets kicked in.

  48. I use both hands.

    What a braggart.

  49. Chthus:

    what flavor of grad school?

    good luck with the home stretch there!

    best,
    VM

  50. Rhywun: Or I have carpal-tunnel.

  51. Having recently taken a job in the mortgage industry, you’ll all be pleased to know that we file at least two and sometimes three forms with DHS every time we close a loan.

    If the government doesn’t want people committing crimes, they should do the leg work. Why the hell do we care, and why on Earth should it be our responsibility to bear the responsibility for the actions of others and the costs of catching them at it?

    Timothy, consider it the banking industry’s contribution to the GWOT! Of course it is not a “tax.” It is just..a..consumption of your time, energy, labor, and capital mandated by the government for ill-defined purposes?

  52. VM,

    I’m trying to wrap up a PhD in neuroscience. I’m currently finishing up a manuscript for a journal and writing my thesis (aka fucking around on the internet). I hope your pain in the ass is as fun as mine was (actually was fun at many points, just not at the moment).

  53. wow. cool!

    Well, at least Thoreau has paved the way!!!

    cheers! (and continued good luck in your endeavors!)

    (i’ll wear my Depakote t-shirt in your honor on defense day!)

  54. Way to go Penney!

    I wonder who sold them that system.

    First off Penney is not explaining the situation properly. The DHS is never never never going to write them back and tell them that it’s OK to cash that check because they have determined that it is in fact not part of an AlQ scheme. Neither are they ever going to write someone back saying “Wow, good thing you didn’t post that deposit, cause millions would have died if you did.”. What’s happening is that their system flagged it and now it’s gone onto their internal review guy to decide what to do with it. And, aparently, the system is generating too many alerts or the guy takes his job too seriously since he is taking too long to post the deposit.

    What should have happened instead is that they should have just deposited his check, SARed him, and let DHS sort it out.

    SAR them all, and let DHS sort them out.

    In a million years our descendents on a billion worlds will file a trillion SARs a day and in that time from now to then there will be not one crime prevented.

  55. VM,

    Thanks. Hopefully that’ll be sometime in April. What sort of grad business have you gotten yourself into?

  56. Econ (econometrics geek)… love it 🙂

  57. As much as this bugs me, this is not really a product of the PATRIOT Act. The money-laundering provisions have been brought to you courtesy of The War on (some icky non-prescription that only Hippies use) Drugs.

  58. As much as this bugs me, this is not really a product of the PATRIOT Act.

    My inability to open a bank account without a credit card IS a result of the Patriot Act, according to the plastic signs posted in banks. I’m still waiting for some government idiot to explain how having a credit card makes the difference between a terrorist and a law-abiding citizen who just wants to switch to the damned bank down the street.

  59. And, to think, I remember a time when I could open a bank account by walking in and just telling them my name.

    I’m not that old (well I’m old compared to almost everyone here) but but this shit is making me crochety beyond my years.

  60. “The more I’m on, the scarier it gets,” [Walter Soehnge] said. “It’s scary how easily someone in Homeland Security can get permission to spy.”

    You know, maybe there is a bright side here (I have to try to see a bright side or I’ll get crankier and crankier). If this starts to affect more and more regular Joes (Walter probably thought PATRIOT was just hunky-dory until this) they’ll get on their congresscritters to end this crap.

    OK, am I a cockeyed optimist or what?

  61. USA Patriot introduced more of the “know your customer” nonsense and also broadened the scope of what a “financial institution” was for Bank Secrecy Act purposes. The KYC thrust was originally a War on Drugs measure that the Clinton administration went into fifth gear trying to impose on banks; however, just about everyone (consumer advocates, banks, etc.) opposed KYC and killed most of it in the 90s. Unfortunately, people in our government took advantage of 9/11 to throw it into the Patriot Act. Of course, none of this crap works very well, and it puts the burden, cost, and responsibility of law enforcement in the hands of bankers and pawn shops. Great idea. How many billions do we waste a year on this kind of “We Did SOMETHING” legislation?

  62. Which just goes to show that the idea that civil liberties are particularly threatened by this one law is flat out wrong. There are plenty of other laws and extra-legal activities to worry about, too. Which, taken together, are an order of magnitude worse than USA Patriot.

    Sleep tight.

  63. Damn you, Pro Libertate, I had just fooled myself into a good mood and you had to post that. Now I’ll just have to go home and get drunk. 🙂

  64. Isaac, to cheer you up, here’s another entry for the The Top 100 Things I’d Do if I Ever Became a Libertarian President:

    #41: I’d host a two-hour show every week where I’d read our creepiest classified documents to the public: “Whoa–didn’t know Mother Teresa worked for the CIA. How about them apples?”

  65. Lest anyone think this is just a laugh-at-the-stupid-government moment, it has real costs to citizens. I recently sold a house, and decided to pay off a bunch of consumer debt with some of the proceeds (more than $20k worth). The bulk of this was four cards with significant balances. We paid electronically for each a couple of days before the due date. All of the payments were delayed before being posted in a manner my minimum payments never were. As a result, i got socked with additional interest and late payment charges by each card, for a total of about $250. Is it DHS’ fault? beats me, but I suspect it might have been. It’s not a huge amount of money, but why in hell should I be out a couple of hundred bucks?

  66. Fred it was probably your bank wo held up the payments and you should ask them to explain it. One thing is for sure that your payments were not approved terrorism free by DHS before posting.

  67. “Whoa–didn’t know Mother Teresa worked for the CIA.

    I knew it! 😮

  68. “Whoa–didn’t know Mother Teresa worked for the CIA. How about them apples?”

    Didn’t Christopher Hitchens already blow that wide open?

  69. Codename: Terri. Using sexual wiles and the garrote, “Terri” was one of the CIA’s most powerful assets in the 1980s. Reputed to have convinced Mikhail Gorbachev to embrace capitalism after one night at his dacha. Also believed to have captured and enslaved “Carlos”, the infamous assassin.

    Current whereabouts unknown.

  70. Is it DHS’ fault? beats me, but I suspect it might have been. It’s not a huge amount of money, but why in hell should I be out a couple of hundred bucks?

    I smell class action! Who’s with me!?

  71. timothy

    “or that I don’t understand economics.”

    Very old joke:
    New professor learns that the Economics Dept. uses the same questions on the tests every year.
    “Don’t you know the students save them and pass them on to next years class?”
    “That’s alright, we just change the answers.”

  72. You know, getting a bank account in Bermuda looks like a better deal every day.

    Capital flight: it’s not just for drug dealers and embezzlers anymore.

    -jcr

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