Depositors lose access to cash in bankruptcy of fintech Synapse

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PUBLIC DEFENDER By Brian Livingston Hundreds of thousands of consumers have lost access to their checking accounts, debit cards, and credit cards due
[See the full post at: Depositors lose access to cash in bankruptcy of fintech Synapse]

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Norio, lmacri, fisher75, Sueska, DLivesInTexas, IBM1130, rc primak

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” … For example, I’ve divided my personal funds into accounts at …”
My grandma pre-empted you with “Don’t put all your eggs in one basket”
(grin)
Chris

Unless you're in a hurry, just wait.

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This is the problem with online-only or app-only financial services. They are not real banks, and are not insured by the FDIC. It’s a lot easier to set up an account and initiate financial transactions in an app or a fintech service, but there is very poor security, often inadequate record-keeping, and little or no recourse if something goes wrong which either locks you out of your money, or makes your money disappear or go to some unintended recipient.

I only deal with bricks and mortar financial companies.

-- rc primak

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WSbobby-p, NaNoNyMouse

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rc primak wrote:

This is the problem with online-only or app-only financial services. They are not real banks, and are not insured by the FDIC.

Most online banks are insured by the FDIC:

FDIC Insurance

Most banks are insured by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance protects your deposits up to $250,000 per depositor, per ownership category in each bank. If your bank fails, FDIC insurance ensures your funds are protected up to the deposit insurance limits.

Are Online Banks Safe?

FDIC Consumer News: Is Digital Banking for Me?

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Norio

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From the same reference:

On the other hand, online banks lack some traditional banking services that can improve your sense of security:

You can’t visit a local branch for a face-to-face conversation with a bank employee.
No access to safety deposit boxes for record and valuable safekeeping.
No services like cash deposits, money orders, notarization, and more.

Also note: There are fintech apps which imply that they are backed by online banks. This is not always exactly true. Being financially owned or partly owned by a bank does not necessarily mean that the bank fully supports the fintech app.

I don’t know how safe or secure Zelle is, but my bank uses it. I haven’t used it, so I don’t know how the experience is. And Zelle is one of the better protected fintech apps.

-- rc primak

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To me this just proves you don’t and/or can’t trust virtul banks, or online only banks.
Online only banks are just too risky to me, because they just seem to take too many risks

I am still trying to understand how or why people trust online only banks, that actually they know next to nothing about.

I prefer the security of a brick and mortar bank that i can visit or bank online with.

Of course this is just my opinion.

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I’m truly not trying to blame the victims, however it wouldn’t surprise me if there might be a positive correlation between “I don’t have time to research the company. Too busy.”, “I never read the EULA or Privacy Policy. No time.” and “”Oh, it’s a new, easy-to-use, convenient phone app. Nice.”. Always look behind the curtains…   Even if I’m just buying a CD online, I will research the health and ratings of the issuing institution first. Such vigilance seems ever more necessary with the explosion of fintech.

I wish that such financial infrastructure companies were more tightly regulated. I also wish that financial literacy and critical thinking were required classes in our educational systems. (I know. If wishes were fishes….)

Win10 Pro x64 22H2, Win10 Home 22H2, Linux Mint + a cat with 'tortitude'.

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Ross ONeill wrote:

To me this just proves you don’t and/or can’t trust virtul banks, or online only banks.
Online only banks are just too risky to me, because they just seem to take too many risks

I am still trying to understand how or why people trust online only banks, that actually they know next to nothing about.

I prefer the security of a brick and mortar bank that i can visit or bank online with.

Of course this is just my opinion.

While I understand this, in the UK the traditional banks are closing their branches as fast as they can get away with. It isn’t unusual to find that there is no bank with a branch within 20 miles of a small town. That’s any bank, not just your chosen bank. The bank I’ve used for 50 years is the only one with a branch within 20 miles of where I live now, and that’s only open occasionally. Even when it is open, you can’t conduct anything other than very basic teller services except by appointment on a specific day of the week.

They say this is because everyone now uses online banking. A large part of the reason for that is because there are no usable branches any more! Even building societies are following this trend. (Even the one which loudly advertises it isn’t closing branches is sharply reducing when they are open – the same staff are still there, answering the phones, but the doors are locked.)

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Sueska, NaNoNyMouse

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