A friend of mine just got hit by a band of thieves! They wiped out a lot of money from his bank account. It happened to me as well, a number of years ago. I want to help you to make sure these bandits don’t strike you.
Now, you are probably asking how the thieves were able to get money from a bank account, right? Well, in this case the thieves are the Philippine banks themselves, and they are stealing money from United States bank accounts! How? It is actually quite simple. You see, here in the Philippines, when you go to use an ATM machine, quite frequently the transaction fails, and a message will be printed on the screen that says “Transaction Failed” or “Transaction Canceled”. It happens a lot, maybe 10% of the time that you try to get money from the ATM. I don’t know for sure, but I suspect that this happens when there is a communication problem on the network from the Philippine Bank to the bank in the USA. I suppose those things happen.
There is a problem though. You see, when the transaction fails to complete, you are given no money, but the Philippine bank still takes the money out of your US account… they just never give it to you! So, say you tell the machine that you want P20,000 (about $400), the transaction fails, you get no money, but $400 is taken out of your US account! This doesn’t happen every time that a transaction fails, but it happens more than 50% of the time in my experience. You can recover the money, but only if you are able to see that the money was taken and file a complaint with the bank (better make sure you have all your receipts, etc). It can take up to 3 or 4 weeks for the money to be returned to you, though.
When I first moved to the Philippines, this was happening to me, but I didn’t know it. Transactions failed all the time, but I didn’t really keep up with my US account – yes, stupid of me – and they just kept taking the money out of my account. I didn’t realize what was happening until about two years later. I shudder to think of how many thousands of dollars the Philippine banks stole from me.
I now have a system in order to keep this problem to an absolute minimum. When I go to the ATM machine, the first thing I do after logging in to my account is to do a balance check on my account. If communication between the banks is down the balance inquiry will not work. If the communication line is clear my balance will show up. If I am able to check my balance, I then withdraw money. Ninety nine times out of 100, this works and offers no problem. Rarely, the communication will go down between the time in do the balance inquiry and the time I try to make a withdrawal. But, only very rarely. I highly recommend that you do this when you use the ATM. Another thing to do is to use your online banking to keep tabs on your US bank account to make sure that nothing unseemly is happening.
I wonder what the people at the bank do with that money when the books show an overage every day? For me, this is nothing but plain and simple theft. It would not be hard to figure out who the money belongs to by just checking the records of the ATM machine. I guess that would be too much trouble for the bankers though. And less profitable!
Hello bob!
I experienced that problem too! I have ATM account there in davao and I was so shocked what the hic I didn't get any money in the ATM machine it says failed and then the machine issued bank balance and was deducted with the amount of the money that wasn't released to me because it say failed. I was upset and it was evening I want to talk to the bank personel immediately. There was a guard and I approached him and it happen that there were some employees that work overtime in that evening the guard allows me to talk to the people inside the bank. What an aggravation was that! They want me to come back in the bank on the folowing day for some yadayadayada. Another problem dealing in the bank there about the credit card. They didn't send any notification or billing information in your credit card. How would you know when will you pay your obligation/bills? They adviced me for a debit memo direct to my account and I don't like that because it would be nice to have a billing information first. Oh well! I cut off my ATM account as will as my credit account no more hassle.
Hi there, Denz! Nice to see you over on this blog!
It's really a shame about the way this is going on. I wonder why? Surely, they know that their accounts are in excess when they balance their books every day. It makes me wonder if it's intentional that this is going on. I hope it's not, I don't like to think badly of people like that. As a friend always tells me – "never ascribe to malice what could be incompetence."
Theft pure & simple,
If it is challenged they simply admit there was a problem and issue a credit, if no challenge well, you know the result.
I am a data processor and most professional applications I develop look for failure at key transaction points and attempt to recover at those points. Recovery is never, act as if the transaction succeeded and not keep things in balance.
That is, in the case of ATM transactions if communications breaks down between the ATM and the customer's bank the whole transaction fails. Not just the part about giving the customer his/her money.
Yes, accounts are not in balance but they will probably say the cost to fix the problem is greater than the problem itself (duh, a robber who never gets caught or is penalized very lightly is not dis-incentivized).
Yeah Bob, I am like you, I agree most people caused inconviences are due to incompetence rather than malice, but I know enough about what happens under the covers to ascribe this to malice.
In certain instances it might be permissable to batch (i.e. bundle them up for later processing) the failing half of the transactions and process those once the communications channels arise again, and in this case the right thing to do would be to issue you the cash and debit your bank account later. However, I would not support such a course of action, but from a pure data-processing point of view it could work (providing the ATM network was willing to eat some NSF transactions).
Of course, what is happening the debit portion fails, so the bank issues itself a credit and then batches the debit for later processing. This is simple and deliberate thievery.
I am very glad when The Empress & I were in the Philippines last January we just wrote checks to her sister and she provided us with the pesos we needed.
This is not incompetence, that is a very deliberate business decision, I would guess there is logic in the automated decision making process to act differently if the withdrawal is against domestic banks vs. overseas banks.
Hi Marcus – I do tend to put this into the "malice" category, but I naively hope that it is not. I practically live from the ATM machines, basically 95% of the money that we live on comes via ATM from our US account, so this is a real hot button issue for me. We have learned to be very careful and vigilant in using the ATMs.
thanks for the tip, bob.
call me crazy. but seeing a growing number of foreign residents in the city, can getting organized and trying to promote changes in the banking sector or influencing a prominent lawmaker to bring this matter to light be possible?
ok maybe im crazy. but i also know the brutal truth that being a foreigner sometimes carry some prestige in certain sectors in this country.
this is a troubling issue. very amatuerish of a country trying to promote foreign investment or residency (not to mention the retiring balikbayans) in the country. my bank account is US based and i can imagine a visit to the ATM can be quite stressful.
Hi Macky – I don't know how possible it would be. When I have tried to get involved in government type stuff before, I have gotten the signal that as a foreigner my views were not necessarily welcome. It may be different with others beside those I was dealing with at the time.
What I would like to see is for somebody in the government – a senator maybe – to take up this issue and make the banks offer some kind of accountability on this issue. I do believe that it is badly needed.
Good info here Bob,
Since the first time I ever used a ATM in Seattle in 1973 the only money I have ever lost in a American ATM was in the out of network bank fees. But the few times I've used ATM's in the Philippines I have experienced some problems. Once at Land Bank in Manila the receipt showed me getting P4000 even though no money came out. I got on a flight to Los Angeles later that day and all I could think about is how I was ripped off and the first thing I did when I got back home was to check my online bank account and was surprised that Land Bank did not debit my account, so I think they fall into the honest group. But my wife once made a withdrawal in Bukidnon from another bank ATM(I don't remember which bank) on her Metrobank account and didn't receive any money. She went back and forth between banks and didn't get that one resolved. Metrobank told her the other bank got the money and the other bank told her the money was dispensed to her. I do I like your idea about checking the account balance first before proceeding with a withdrawal to make sure the ATM is online and we will do that from now on. I am also only going to use a foreign ATM when the branch is open so I can go in the lobby immediately and complain if there is a problem. Maybe if we start posting which banks are causing the problems we can find which banks can accurately and honestly handle our money.
Hi Paul – It's not a bad idea to build up a database of banks where problems have developed. I'll have to think about doing that.
Thanks for stopping by!
In all banks there are certain procedures they have to follow. I believe two senior officers will verify the account of ATM at every closing not necessary every day, but always when it run out of cash. Any excess canl be a result of transaction failure. Since its always checking time only when the machine run out of cash, then the officers will not have their hand on any balance cash cos there is non. The excess money, which is only in paper statement, will be transferred to a unclaim account waiting to be claimed. Or if the bank do in a bit search work, they can trace who the ATM user is. cos amount is credited but that moment cash was not dispend. This is my opinion on how ATM works through talking to bank personels. one can never lost money through ATM unless 1. officers are not honest or 2. customers fail to claim because unaware.
Hi Alan – I would agree with #1 – officers not honest!
Thanks for leaving your comment!
I’ve never lived in the Philippines (however I am giving it a lot of thought), but I have lived in Malaysia and Indonesia for the past 6 years. Never once did this happen to me and I withdraw money from my US account quite often. I wouldn’t think the Philippines would be any worse or more corrupt than Indonesia. Are these small banks you are going to? Perhaps going to the major banks is safer or just have the money wired from your US account.
There is a scam in Malaysia where some hackers attach a device to an ATM and it steals the data from your card, then of course they take all the money in your account. The device is hard to spot and looks like it is part of the ATM. That could be happening too in your area.
Reading your blog on this though has opened my mind about the possibility of this happening. I think I’ll stick to the main banks from now on just to be safer.
(oops, well, my wife has informed me that this has happened to a few people here. I really hope it’s not dishonest people and just a bank error or no cash in the machine to dispense. I’d like to think people are inherently good in nature.)
This has happened to me at the biggest banks in the Philippines. It happens a lot at BPI, because that is the bank we use most often. So, just be aware, and any losses can be avoided.
hhmmm…wonder if it is possible to set up a bank for expats only…
question Bob, is there no USA bank branch there or affiliate?
Hi brian – To my knowledge, Citibank is the only US bank doing business in the Philippines. They have branches in Manila and Cebu. Since I live in Davao, that kind of leaves me out! HSBC does have a relatively new branch here in Davao, though.
Hi Bob last year I try take money from ATM from some
philippine banks and I can't to take money and after
I try PCI bank ATM in vigan I take 10000 pesos and
other I take 20000 pesos I haven't problem. Just make test I take money from philippine bank I don't know how I take my salary.I thinking is good idea make black list of the banks.
Bob thank you for this post. My last trip to Davao I withdrew about 800 dollars via two transactions. The machine at the first bank I went to failed and we found another but my account was debited for the 400 dollars. I never quite knew what happened and I had no recourse from the U.S.. I am going to assume this is where my 400 dollars went. I accepted the thought that maybe I made a mistake and did not finalize the transaction or left the money. Oh well from now on I am first a balance checker. Thanks, Ron
Bob,
"Check your balance first, then do your withdrawal," is carved into my memory from now on. But I wonder if we might have a voice to effect a change in the system. It is obvious that deliberate theft is a matter of bank policy. I think some pressure could be brought to bear on these guys. And I think one of your posts in March shows where to apply it.
Remember the one about Director General Edgar Aglipay, Chairman of the Philippine Retirement Authority who said he and his government agency have "a mandate to attract foreign nationals 35 years and above, and former Filipino citizens to retire in the Philippines." Since they want to make the Philippines the retirement haven of the world, I think his office is one to approach about this problem. His focus is people from abroad coming to the Philippines, and if those are the people getting cheated systematically by the banks, he should be concerned. Maybe he can help put the banks' feet to the fire. What do you think?
Don't balance inquires cost $5 USD, and each transaction too? So if you check your balance, then withdraw won't it cost you $10 to get about $400?
When my sone was there he checked his balance regularly, and always before making a withdrawl. Each balance check and withdrawl was charged $5.
I agree this is a far safer way to make sure you do not lose the amount you intend to withdraw – just curious if anyone sees the balance check charges too.
Hi Zois – Good idea about making a blacklist of banks. Only thing is that I do feel when this happens on some banks it is just an error, and they are easy to deal with and fix the problem quickly. Other banks you practically have to fight with to get YOUR money back.
HI Ron LaFleur – Sorry to hear that you got stung by this scam!
Hi Kevin K. – Yes, it might be a good place to start with Mr. Aglipay, like you say. I don't know if he would have influence with the banking sector, but maybe he could do something.
Hi Ron D. – The amount that you pay for ATM transactions is determined by your home bank. IN my case, any transactions with ATMs are free of charge. I can check my balance, make a withdrawal or anything without paying a cent in charges, even on a foreign ATM like here. My bank picks up all charges on that, even if imposed by the foreign bank.
Sorry to say that I had no idea this was allowed to happen, I have often come across ATM that run ou of money on a regular basis.but the fool I am , I never checked my account, the only good thing is i limit myself to a very small amount on my credit withdrawl limit per transaction.
Great info BOB
Hi John – Keep a close eye on your balances! It still happens to us regularly. Not a good thing!
Good info, Bob. It has not happened to me … but I avoid using my US card like the plague anyway … they are carried only for emergency purposes. I have my income direct deposited in my US bank and transfer it to my pesos account here and use the pesos account ATM for small transaction. For the income that people insist on paying me with paper chacks, I have the checks mailed here and deposit in my BDO dollar account. Takes a month to clear but there is no service charge.
This question of US banks with Philippine branches comes up again and again. There are none. Citibank in the US and Citibank in the Philippines are two complete,y different companies, operating under the franchise of Citigroup. Philippine National Bank has a US subsidiary in New York, so it is one of the few that could be said to operate in both counties … but it's a Philippine bank, not a US bank. HSBC operates in both countries but it is a Hong Kong bank .. it's neither US nor Filipino.
Any bank operating in the US, no matter who owns it, must operate under US banking laws and any bank in the Philippines must operate under Philippine banking laws … that's the long and the short of it.
Hi Dave Starr – Interesting thoughts. I also use a local bank (I-Bank, now owned by Union Bank) to clear any checks I receive. I do use ATM transactions a lot, though and have to really watch out for this scam or mistake.
I have U.S. based bank account, but don't use it unless absolutely necessary. I have a Philippine bank account with ATM card. I wire transfer money once in a while to that local account, and use the local ATM card for withdraws. I do this because I don't want to pay the $4 or something ridiculous fee charged for each foreign ATM withdraw. And most banks, the max withdraw limite per transaction is 10,000p, some with just 4,000. So imagine how much you are losing! But with the method above, I get charged $25 wire transfer fee, then no local fee for transactions. The only time I use the U.S. atm is when the local ATM card is not accepted for some reason at the atm machine…
But I will certainly do that prescribed method from now on if and when I am using the U.S. card.
Hi Jio – I am lucky, my US bank doesn't charge me anything for foreign ATM withdrawals. By the way, you can take out P20k at BPI ATM machines.
Hi Bob….Bill Huff Here….when you state US bank, do you mean that your bank is from the US…..or are you referring to the US bank by name….and if not, what bank do you use…????
Hi Bill – Long time no see! All references to a "US Bank" refer to "a bank in the United States." I am not referring to any specific bank. I personally bank at RBC Centura Bank, which is in North Carolina.
Explaination on why your accounts has been deducted when you do a withdrawal at the ATM and no cash came out. While you do a transaction, the ATM send a data request via the phone network from one bank to another across the ocean. The receiving bank analysis the request and if everything is in order it will send back an authorised instruction for payment. During the transmission of data back to the ATM, there maybe a distortion, more of a distortion then a breakdown of communication. By then your account has been debited while the ATM is still confused on the distorted data. Because of this, money is withheld. The next time this thing happened blame it on the phone line.