BT/AOR Gone Wrong - USAA Negative Balance = Very Bad *Resolution Achieved; Lessons Learned Added*

I started an AOR/BT around the 4th of July. Since then, I have deposited (via checks and BT to credit card/cash advance) around $100k in a USAA Performance First Index account. My accounts are currently frozen (credit card and Performance first with USAA) and I am being investigated for kiting. USAA has requested that I provide the account numbers and contact numbers for the banks from which the transaction originated. They suspect that I am kiting while using 0% offers from other banks (which doesn't make much sense to me). What should I do? I'm concerned that if I provide the account information requested that USAA will negatively impact my relationship with the other creditors. I'm also concerned that USAA may hold the money indefinitely (or at least for the foreseeable future) while this gets resolved.

Has anyone encountered a similar situation? Any advice would be greatly appreciated.

Pack your bags, you're going to JAIL!

Sounds like bad luck or you suck at AORs.

Xenius said: Kiting while using 0% offers? How exactly do they mean? From what I understand kiting was the old practice of writing checks for amounts you don't have, and then taking advantage of "float" to deposit the funds later. If you are having BT funds sent to them, how is that kiting?
According to what I've read, you are exactly correct about kiting. So, the two are complete separate practices. Kiting being illegal and credit card arbitrage not.

Exactly, kiting does not apply to your situation. If you took the 0% money and deposited it into this account, and everything cleared fine, I'm not sure what the problem is. I would call USAA and scream until you get a supervisor to clear this up, as thier reason is not valid at all. If that doesn't work, then give them one bank to call and verify the funds from BT are ok. Don't give them all the contact info unless you absolutely have to. Know any good lawyers?

Why not ask USAA exactly what they mean by kiting?

If they think you are making short-term BTs from one card to another to hide debt, you can simply present some documentation that you have 0% 12-month offer, and find one CC that you BT money out of that is willing to say that it is OK from them if you use the BT proceeds in a checking / savings account.

The first time I ever BT-ed money out of BoFA was at the suggestion of the rep. When I told them I don't need the money, because I earn enough to cover my ongoing expenses, he said - do you have other projects, like a new car you want to buy, or a vacation you want to take, or an investment idea, like stock market. I said yes, to which he said that he will transfer my money directly into my brokerage account.

I read the USAA thread and it looks like the transfer might have been CC-to-CC, creating a negative balance, so my suggestion might not work. Sorry.

There's more to this story.

OP, it seems that USAA is no longer credit-balance friendly. For others looking to launder BTs using USAA credit cards, be sure to ask for a cash advance BEFORE the BT hits.

I'd be willing to bet this was the biggest factor that initiated their investigation.

lhendricks92 said: There's more to this story.

OP, it seems that USAA is no longer credit-balance friendly. For others looking to launder BTs using USAA credit cards, be sure to ask for a cash advance BEFORE the BT hits.

I'd be willing to bet this was the biggest factor that initiated their investigation.yep thats it.

OP, you should know from reading FW that USAA was involved with a massive fraud concerning the VA about a year ago and became very unfriendly to the games played in this forum. If the funds are already in the index account, earning interest, you should be fine whether they have placed a hold or frozen them or not. Youll still earn interest.

http://www.fatwallet.com/forums/arcmessageview.php?start=560&catid=52&threadid=508254

No, the lesson is that issuers don't like credit balances. Credit cards were meant to be debit, then payment, not vice versa. It really is as simple as that.

With regard to kiting I'm not sure that the people at USAA know what that means. I have overdraft protection that charges my credit card for a CA if I am NSF in checking. I wanted to know if they'd get upset if I exceeded my credit limit in a cycle, so the example I used was 'write a check for the credit limit on the card. Pay it off with cleared funds, then write another check' would I get in trouble. The answer that I got back was that I would be 'kiting checks'. Hogwash, I had the funds to cover the first check. Just because I draw on a LOC to cover doesn't make it kiting. Anyway, I just decided to stick with my credit limit as a max for each cycle.

ChumChurum said: Why not ask USAA exactly what they mean by kiting?

If they think you are making short-term BTs from one card to another to hide debt, you can simply present some documentation that you have 0% 12-month offer, and find one CC that you BT money out of that is willing to say that it is OK from them if you use the BT proceeds in a checking / savings account.

The first time I ever BT-ed money out of BoFA was at the suggestion of the rep. When I told them I don't need the money, because I earn enough to cover my ongoing expenses, he said - do you have other projects, like a new car you want to buy, or a vacation you want to take, or an investment idea, like stock market. I said yes, to which he said that he will transfer my money directly into my brokerage account.

I read the USAA thread and it looks like the transfer might have been CC-to-CC, creating a negative balance, so my suggestion might not work. Sorry.
I did ask and received an explanation about check fraud. I tried to explain that I was using 0% balance transfers, but the individual in charge seems to scoff at the idea.

SUCKISSTAPLES said: lhendricks92 said: There's more to this story.

OP, it seems that USAA is no longer credit-balance friendly. For others looking to launder BTs using USAA credit cards, be sure to ask for a cash advance BEFORE the BT hits.

I'd be willing to bet this was the biggest factor that initiated their investigation.yep thats it.

OP, you should know from reading FW that USAA was involved with a massive fraud concerning the VA about a year ago and became very unfriendly to the games played in this forum. If the funds are already in the index account, earning interest, you should be fine whether they have placed a hold or frozen them or not. Youll still earn interest.
I'm not worried about the interest so much as I am worried about making payments for the $100k+ of debt that I've incurred. I have enough to cover 6-7 months provided a BT I made to another checking account doesn't encounter similar resistance. I'm very worried about having $80k+ of debt in 6 months and no money to cover it. The USAA investigator suggested that the account can be left on hold indefinitely. Now THAT worries me.

brushwood said: I think the referring to a different definition of kiting. I have read about credit card kiting which involves paying off your credit card debt with cash advances from other other credit cards, ballooning your debt dramatically while not paying down any of the principal until nobody will loan you any more money and you default. I think that is a much less common usage of "kiting" but I have seen it and it makes sense in this context. I don't know why it is any of the banks business if you were doing that, which you are not.

edit: I just saw your response where you said he described check fraud to you. This whole thing sounds weird. You just need to demand that they get it straightened out ASAP. You didn't do anything wrong.
I agree. I'm seeking legal counsel from Base Legal to make sure I understand exactly what's happening.

Does anyone have any suggestion on whether or not I should provide USAA with the account information of the other banks? I'm worried they might ruin my relationships with the other financial institutions.

1. Sue 'em to get your money released
2. Sue them for false accusation / misrepresentation / Slander
3. Sue them for harrassment

Search the FWF forum for the bank auditor thread (or whatever it was)... although not a bank, you may find useful information there.

Lastly, Sue 'em!

EDITED to add, I agree w/DSD just above... I was writing mine while he posted.... the appearance of illegality is SOMETIMES indication of such... let them know that you are investigating THEIR actions, and they may just roll over and apologize!

ArbolLoco said: I don't think that freezing an account by a financial institution due to suspicious activities in the six figures that resemble fraudulent activity or money laundering is actionable in any American jurisdiction.

I would just tell them to cash me out and let me take my business elsewhere.
This is what I foresee myself doing once I've spoken to a lawyer.

JohnGalt69 said: ArbolLoco said: I don't think that freezing an account by a financial institution due to suspicious activities in the six figures that resemble fraudulent activity or money laundering is actionable in any American jurisdiction.

I would just tell them to cash me out and let me take my business elsewhere.

You don't think breach of contract is actionable in any jurisdiction? Without knowing the specifics, you shouldn't make a comment like this. I think seeing a lawyer is a good idea. They're not letting him cash out.

there is also that fascist policy called patriot act. I will be careful. Doesn't USAA cater to military families, and is probably leaning so far to the right that anyone doing anything different is presumed to be a terrorist until proven otherwise? Knowing that, why would you want to fund AOR money into it?

In the future I'd suggest transferring smaller amounts at a time , and into different accounts at different institutions. You probably spooked them with the sudden change in your normal banking habits.

curtisekarr said: In the future I'd suggest transferring smaller amounts at a time , and into different accounts at different institutions. You probably spooked them with the sudden change in your normal banking habits.

that is utterly bullshit. I have funded over 100K AOR money in a week, and over 60K in a single deposit into HSBC, and nothing happens. You should use a bank that caters to the reality based community.

agentpt5 said: curtisekarr said: In the future I'd suggest transferring smaller amounts at a time , and into different accounts at different institutions. You probably spooked them with the sudden change in your normal banking habits.

that is utterly bullshit. I have funded over 100K AOR money in a week, and over 60K in a single deposit into HSBC, and nothing happens. You should use a bank that caters to the reality based community.I was drunk in a car full of hookers and blew through a bunch of red lights with an eightball of coke in my drink holder, and nothing happens.

Check kiting is writing two checks, one drawn on one count and another drawn on another and depositing them in the opposite account. The intention is to have the two checks essentially cancel each other out, and I believe make money off the interest from the temporary "credit."

With that in mind I would simply demand that USAA calls the banks the BT checks are drawn on to verify they are legitimate checks, and there are cleared funds in the "account" that the BT checks are drawn on.

Congrats Abra...I just read this thread, start to finish today, oct 19...what an adventure! I am sorry you had to go through this but I'm glad you got everything settled! Stuff like this sorta tests you out...I just feel relieved for you!

And thanks a lot for taking your precious time out to share this with all of us as well, I sincerely appreciate it!