=================
Fewer laws protect you now. In some ways, the laws are more virtual than real, and only apply to real situations, and not virtual ones.
Let me explain.
Though checks make up an increasingly smaller fraction of transaction volume in the US, they are still a lot higher here than in Europe.? As such, federal and many state legislators have not caught up with the effects of a hybrid system, where they attempt to regulate electronic banking transactions under the same rules as paper checks.
Many people like making mobile deposits, rather than going into the bank, or snail-mailing the deposits in.? But what happens if a check gets mobile-deposited to two banks?? Or, since many banks don’t actively check mobile deposits closely, what if someone repeatedly deposits a check to his bank, while altering the check number?
The latter scenario happened to me, and I am out a considerable amount of money because I was not following my accounts closely.
- My soon-to-be former bank would not reimburse the losses, citing the account agreement, even though they facilitated the thefts by not checking the drafts against my account.
- The same was true of the bank of the fraudster, which accepted the same altered check again and again.
- The state of Maryland would not prosecute fraud charges against the person, because the crime was not committed inside a bank branch, and they could not conclusively prove that the perpetrator did the crime, even though all of the money went to his account.? And,that is even though the perpetrator admitted it to me, and I have it in writing.
- Thus, I have an informal agreement with the perp to pay me back or face a tort claim.? His situation is not strong, and you can’t squeeze blood from a stone.? I could force him into bankruptcy, but what good would that for me?? I’m not vengeful.
So what is the best defense?? Check your transactional accounts weekly if not daily.? On that level, the banks will take the losses, if you identify them fast enough.
I began doing that recently, and found someone using one of my credit cards to pay his phone bill.? I have since reversed most of those charges.? GIven that many vendors try to induce you into payment plans that auto-renew, it is wise for that reason to do so, that you would cancel services that you no longer use.
So what can I say?? I could have not written this up, but I am not perfect in my personal money management… better that others learn from my mistakes.? Until the state and Federal governments get their acts together, you are your own best defender.? Check your transactional accounts frequently.? The money you save will be your own.
David,
Would the OCC have any teeth here?
Thanks for posting this. I hadn’t heard of it, and immediately started searching the web. This presentation seems to indicate the liability falls on the bank that allowed its customer to use the mobile app (page 4):
http://www.socalexpo.net/documents/presentations/2017/5B.pdf
I’m so sorry to hear about your loss. I check my bank account, my main credit card, and my main brokerage accounts daily, and everything else at least monthly. I am retired and have time to do this, but I tried to do it even when I was working. I also have access to my adult children’s bank accounts and check them daily also. At first they thought it was a little weird to have me looking over their shoulder but they decided that it was a good idea to keep an eye out for fraud, and they decided I had more time than they did and they trust me not to mess around in their accounts. I have to force myself not to pry too much into the details of their transactions (they are adults after all) but just look to make sure that there aren’t suspicious-looking charges going against their accounts.
Thank You David. I am going to send this to my staff and my family. I am sorry for your loss. Your writings have made us all richer. Louie
I have recently started using Personal Capital to track all my financial transactions and thanks to your article I checked my credit card charges and have a $250 charge that should not have occurred.
As many financial websites (banking, credit card) offer the ability to notify owners of any transaction over a specific dollar limit, I encourage everyone to sign up for this service at a suitably low notification level. Yes, it may mean a bunch more emails or text messages, but it can help spot a fraudulent transaction sooner than periodically checking an institution’s website.
For decades, the UCC (Uniform Commercial Code) made banks strictly liable if they honored false/forged checks. Then, with the usual corruption of our systems, the laws were changed to favor banks, with no one at all to stand against it on behalf of consumers. This was disgraceful, no other word for it. However, the UCC does hold liable the party best positioned to detect the fraud, which is a question of fact, which can be litigated against the the bank. I would not take the bank’s word for what their liability entails, and it is quite possible that the agreement they showed you is not consistent with the Maryland UCC. I would advise consulting your legal advisor, assuming there is enough at stake.
I would not be so quick to dismiss the tort claim – while I appreciate your inclination towards mercy, if you obtain a tort judgment it is quite possible that it could survive a bankrupty (fraud claims are not dischargeable in bankruptcy) and if the amount is significant you may be well served by sitting on a judgment until such time as the perpetrator has assets to which it can be attached. At least consider discussing with Maryland counsel before making your final decision.
And many thanks for this blog.
Which bank? I’d like to know if my (or my clients) money is at risk.
The two banks that facilitated it were SunTrust and PNC Bank. That said, if big banks like that showed no care, most other big banks will be like them.