= Subscriber content; or subscribe now to access all American Banker content.

GoBank's Long Deposit Hold Tests Limit of Customer Patience

Green Dot (GDOT) is taking a cautious approach to accepting remotely deposited personal checks—so cautious that it runs the risk of alienating customers and putting at risk tens of millions of dollars in investments at GoBank, its recently launched branchless operation.

A Green Dot executive defended the policy of holding personal checks deposited via smartphones for up to 10 days as a necessary anti-fraud measure. The company added that it believes the policy represents only a minor inconvenience to most customers.

John Morton, Green Dot’s chief risk officer, said that payroll, government benefit and other types of business checks dominate GoBank’s deposits and receive near-instant credit. He characterized GoBank’s long hold on the small number of personal checks it’s receiving as “smart risk control” and a function of the service’s youth. 

“Our experience is that personal checks deposited to a new customer's account via remote capture deposit are highly prone to fraud and abuse and so we have intentionally chosen to have a more conservative clearance policy on these types of checks,” Morton said in an email. “We further expect our clearance policy to evolve over time as we get more customer data from which to draw better conclusions on this topic," he says.

That’s a direction Celent senior analyst Bob Meara believes GoBank should move in quickly.

“Perhaps the worst funds availability I’ve seen,” he said of GoBank’s mobile remote deposit capture policy for personal checks. “A nonstarter, in my humble opinion.”

GoBank appears to be holding onto deposited funds for long enough to eliminate virtually any fraud risk, Meara added.

For customers who do rely on personal checks—such as college students receiving funds from family members—that policy could undermine the entire allure of branchless banking: speed and convenience.

What GoBank is counting on to attract customers is a high-tech, low-cost model that allows customers to select their own monthly fees. GoBank executives hope to turn a profit mostly from interchange fees, which merchants pay an issuing bank to process a transaction.  

For customers who object to GoBank’s 10-day hold, there is an alternative: deposit funds via debit card at a Walmart store and gain access to them immediately.

Bradley Leimer, head of digital strategy at Mechanics Bank, said he believes that despite its fund hold time of up to 10 days, GoBank’s RDC policies are generally in line with those of leading rivals like JPMorgan Chase, USAA and Bank of America.

“Most checks run through RDC aren’t available immediately,” he said.

JOIN THE DISCUSSION

(15) Comments

SEE MORE IN

RELATED TAGS

Comments (15)
Rasco320 ... I AM DOING THE SAME WITH AN ATTORNEY DUE TO EVICTION HE'S LOOKING THROUGH THE TERMS AND CONDITIONS. I BEGGED THE REP NOT TO DO THIS. EVEN ASKED TO SPEAK TO SOMEONE HIGHER SHE TOLD ME SHE IS AS HIGH AS IT GOES. BUT THE 2ND PERSON A MAN WAS VERY VERY RUDE..REMEMBER THERE CALLS ARE RECORDED.
Posted by DEPRESSED | Saturday, February 13 2016 at 10:46AM ET
personally I feel the CEO AND LOST PREVENTION SHOULD BE SUED FOR EVERY SITUTION WITH EACH CARD HOLDER. AS I CONTINUE TO CHECK MY ACCOUNT THAT IS BLOCKED I SEE NO TRANSACTIONS THAT WOULD CAUSE THEM TO BLOCK MY TAX REFUND. THERE ARE CARD HOLDERS THAT NEED TO PAY BILLS, BUY MEDICATION, FEED FAMILIES, UNEMPLOYED AND WAITED FOR IRS TO SEND THE REFUND AND NOW YOU DO.
Posted by DEPRESSED | Saturday, February 13 2016 at 8:31AM ET
personally I feel the CEO AND LOST PREVENTION SHOULD BE SUED FOR EVERY SITUTION WITH EACH CARD HOLDER. AS I CONTINUE TO CHECK MY ACCOUNT THAT IS BLOCKED I SEE NO TRANSACTIONS THAT WOULD CAUSE THEM TO BLOCK MY TAX REFUND. THERE ARE CARD HOLDERS THAT NEED TO PAY BILLS, BUY MEDICATION, FEED FAMILIES, UNEMPLOYED AND WAITED FOR IRS TO SEND THE REFUND AND NOW YOU DO.
Posted by DEPRESSED | Saturday, February 13 2016 at 8:31AM ET
I'VE HAD A WAL-MART PREPAID CARD FOR 4 YRS. MY DD HAS BEEN GOING ON THIS CARD FOR 4 YRS AS WELL AS MY TAXES WITH NO PROBLEM. ON 01/10/16 MY TAXES WERE POSTED I PAID ONE BILL $106.00 AND THEN CAME THE HOLD AND I RECEIVED AND EMAIL ASKING FOR IDENTIFICATION AFTER DOING WHAT WAS ASKED I RECEIVED A CALL TELLING ME THEY WOULD NOT EXCEPT MY ID BECAUSE IT EXPIRED (I HAD NO IDEA IT EXPIRED) ON THE DAY MY TAXES POSTED WAS PERFECT TIMING FOR ME IT POSTED ON MY COURT DATE TO AVOID AN EVICTION FROM MY APARTMENT. I CALLED THEM BEGGED AND CRIED PRAYING TO GOD ON THE PHONE ASKING THEM TO HELP ME AND NOT DO THIS TO ME AT THIS TIME. NO RESULTS THE AGENT WAS VERY RUDE AND HAD NO FEELINGS FOR MY SITUATION. SO NOW NOT ONLY AM I WAITING ON A SHERIFF TO PLACE NOTICE ON THE DOOR WITH AN EVICTION DATE ALONG WITH WAITING ON MY LICENSE TO HOPEFULLY GET THE HOLD OFF TO MOVE INTO AN EXTENDED STAY HOTEL....MY HEART HURT SO BAD .....CAN'T STOP CRYING
Posted by DEPRESSED | Friday, February 12 2016 at 10:08AM ET
I have a bank account with GoBank and my tax return was deposited in my account on 2/3/16 and I started making transaction paying bills they then placed a hold on my account because they felt it was my activity was unusual I had to call the number on the back of my debit card to verify my transaction which I did and they removed the hold on my account so I went back to using my debit card. Later that night they placed another hold on my card without notice and I was not able to use my card at all and then next morning I received a email saying ....We've identified some unusual activity on your GoBank account. To protect your funds, we've temporarily blocked access to your account until we're able to verify your identity. What you need to do to turn your card back on: Using your mobile phone or computer, submit a photo of your Driver's License, State ID or Passport at the website listed below. (We'll give you instructions on how to do this on the website.) When you submit the photo successfully, you'll receive a confirmation, but we'll still need up to 2 days to review it.
I did what they asked that same day which was 2/4/16. As of today which is 2/10/16 the hold is still on my account and I have sent them email after email asking them why my account is still locked after the 2 business days. There is no way to contact the bank by phone and the last reply I received today was We apologize for the inconvenience. Your account is currently under review. We will call you as soon as we have an update. This has been such a horrible experience and I'm a single mother of 4 and I have no other money available on top of that I have a disconnection notice for my utility company if my payment is not submitted by 2/10/16 where I had to borrow money to pay it. I have contacted the Federal Reserve and I have a appointment with a lawyer I will be filling a law suit against this bank I hope anyone else that has had problems do the same.
Posted by Rasco320 | Wednesday, February 10 2016 at 12:26PM ET
BEWARE!!!!! GoBank is the worst bank EVER!!! I had my federal return deposited into this account/card and now they are holding my funds hostage. They have said due to irregular activity that they put a hold on my account. What is their definition of irregular? Buying some flowers, paying a bill, buying so chicken?? I never used the account because I never put money on it. Now I know why. They don't have live associates you can talk to. Just an automated system. I had to choose the lost and stolen button to even get a live person. This is UNACCEPTABLE!!! What REAL bank takes days to verify anything. I'm done. I would not advise anyone to choose this bank. Unless you are ready for major headaches. And now on to the Better Business Bureau website.
Posted by holt223 | Friday, February 05 2016 at 3:38PM ET
ear Go Bank, Today I called the number given to me by Renia. 1-866-652-4611-2365 I talked to a guy. (Who was RUDE and acted like a real JERK) He says that they are returning my $20 in two or three weeks to my WellsFargo Checking account and they no longer want to do business with me. I assume they are going OUT of business. I was going to transfer a large sum as soon as they released my $20 which they have had since Nov 18th. I did receive the card in the mail. But it will not work because they have a hold on my account. This all started on Nov 18th. I used my business PayPal account to transfer $20 to open a Go Bank account. That did not work. So I transfered $20 from my WellsFargo checking account and they accepted that. But they put a hold on my account because of the PayPal. So I called every week but no one I talked to could connect me with a supervisor and could not release the hold. They said they would call me. They did but I was not at home. The girl Abby did NOT leave a number to call back.I never got any EMails until I left a message here. I have talked over 10 hours over 6 weeks and still do not have my $20. Thank GOD I did not transfer my Social Security and Pensions to them. Stick with a REAL Bank and beware. Avoid GO Bank at all costs. I really learned to HATE them. And all over $20
Posted by ParkPro | Tuesday, January 05 2016 at 5:44PM ET
No new posts? Over a year and GoBank's 10 day hold is still in place. Deposited an Allstate Reimbursement check on 7/22 and received email that said funds would be held until 12/15!! Turned out to be a glitch but did not have funds clear until 8/4, thus making our mortgage payment more than 30 days late and stopping our chance to refinance our home. Representative admitted this error was wholly their fault and when I said "So I have to pay the consequences?", he apologized and said "Yes".
Posted by Pamk77 | Tuesday, July 29 2014 at 12:20PM ET
It's interesting that the misleading headline of this article refers to nothing. There is not a single reference in the story to any customer whose patience has been tested by GoBank's RDC holds. In fact, by the end of the story we find out that it's not much different from other providers. What we have here is a lazy opinion piece that I'd call "made-up journalism."
Posted by Chuck Phipps AAP, CTP | Friday, July 19 2013 at 6:01PM ET
10,000 customers while in Beta (prior to July) and listed as one of the top 10 most popular Android apps last week.

http://androidandme.com/2013/07/applications/top-10-most-popular-android-apps-from-last-week-7/


https://blogs.perficient.com/financialservices/2013/07/09/gobank-is-a-crowd-pleaser-on-google-play-store/

"So where's the proof Green Dot is doing it right with GoBank? Yesterday, our team discovered that their mobile app was listed as the #9 most popular Android app last week by Android and Me readers. The app also has 5 stars on Google Play with more than 58 reviews already and acquired 10,000 customers by invitation only before going live."
Posted by Jim Jackson | Saturday, July 13 2013 at 8:14PM ET
Sean, the funds availability for GoBank is 2-3 days with the exception of personal checks. If there is so little info online what did you actually use for background on this 'article'? Nothing apparently.

I've had an account with GoBank since April.

If you really think Bluebird sticks to their 6 business day timetable which is 7 including the 'processing day' for checks you just aren't reading what is out their online. That schedule is for ALL their RDC.

Bluebird actually runs a background check and credit check on customers EACH time they get an RDC request - that is written right into their T&C. Now trying calling Bluebird's English as a second language customer service to deal with any issue and see how far you get.

How many ACTUAL Gobank customers did you get feedback from before writing this?
Posted by Jim Jackson | Thursday, July 11 2013 at 12:49AM ET
Hi, Chuck, I'd like to address your concerns.
First, the bank just launched, so there are complaints online but there are few customers that have had the account for more than two weeks.
Second, 10 business days is the worst funds availability I've ever heard of for personal checks.
PayPal and American Express' Bluebird come in second -- each taking six business days to process a personal check over mobile remote deposit capture.
I'd be happy to talk about this more with you; My direct line is 212.803.8744.

Sean Sposito, Tech Reporter, American Banker
Posted by Sean Sposito | Wednesday, July 10 2013 at 4:49PM ET
It's interesting that the misleading headline of this article refers to nothing. There is not a single reference in the story to any customer whose patience has been tested by GoBank's RDC holds. In fact, by the end of the story we find out that it's not much different from other providers. What we have here is a lazy opinion piece that I'd call "made-up journalism."
Posted by Chuck Phipps AAP, CTP | Tuesday, July 09 2013 at 5:04PM ET
Mr. Morton's defense of GoBank's 10-day hold on checks requires a reader to believe that either the bank has the absolute, most inefficient check processing system in the banking industry, or that Check 21 never happened and image-based check clearing and settlement thru the Fed within 48-hours was not a reality. Far easier to believe that GoBank is simply endeavoring to profit at customers' expense.
Posted by jim_wells | Monday, July 08 2013 at 2:17PM ET
Odd you haven't run the same story about Bluebird which has hundreds of complaints about RDC online. Bluebird has hundreds and hundreds of horror stories online. Amex got your tongue? Have Meara call Bluebird customer service.

Where is Meara getting his info from? They only opened the accounts to the general public a week or so ago.

Other prepaid cards are using 'Chexar', now 'Ingo Money', and charging 4% for non Government checks (payroll). So immediate funds on a payroll check of $1,000 costs $40.

A much bigger question is how Check21 makes funds available to Banks within hours while Banks keep consumers on the old ACH availability schedule.

Why is that AB?
Posted by Jim Jackson | Wednesday, July 03 2013 at 6:46PM ET
Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.