That's a good point. What is the difference between a DDA vs FBO? When would one be used over another?To add clarity, Synapse used to handle two types of accounts: DDA and FBO. DDA are direct deposit accounts with account holder name(s). FBO are accounts belonging to an intermediary (like a financial institution) that specify money For Benefit Of (FBO).
DDA accounts were completely reconciled and there was no reported loss on money. It was the FBO accounts that caused issues since only Synapse knew who the money belonged to and they ceased to exist.
I have limited knowledge of how all of this works, but what surprised me when reading about Synapse is how these fintechs are not very well regulated or transparent and you're often relying on some startup to maintain records properly. They advertise FDIC insurance, but that's not really the issue. It just takes one mistake in the various layers of middlemen to create a major issue. And then the end user is going to have a big headache trying to sort it out.
Statistics: Posted by MCST — Tue Jun 25, 2024 7:47 am — Replies 3 — Views 152