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Too Easy For Bank Accounts To Spring a Leak
The NYTimes has a cautionary tale of automated clearing house fraud. Parties unknown siphoned money from an individual's bank account. Nothing too unusual there, except that it was an elite private banking account at JPMorgan Chase, and the account holder is out $250K — the bank will only cover $50K of his loss. The $300K came out of the account in small transactions over 15 months. The bank offered no recourse except to open a new account, a large hassle given that the account is more than 20 years old and its holder writes a thousand checks a month. The article details how the spread of electronic settlements between banks has given rise to growing automated clearing house fraud — if anyone gets hold of the magic combination of account number and bank routing number, and once has permission to withdraw funds, all bets are off. Banks are unlikely to question future withdrawal orders. Moral of the story: go over your bank statements line-by-line every month, and question anything that looks funny.
The FDIC $100,000 coverage is in case the bank goes bankrupt (or hits financial trouble).
Do you even lift?
These aren't the 'roids you're looking for.
Next time, try reading the article.
Or for critical reading, read the cut-n-paste
That second paragraph cues me in that he DID complain, and was given a runaround and no real answers.
And a retail bank statement is kindergarten arithmetic compared with the monthly statement for a private banking client.
I used to have a Credit Suisse account, and they did, indeed, have incomprehensible statements, even for a simple situation. They had a "current account" and a "time account". The current account didn't pay interest, but the "time account" did. Interest from the time account went into the current account, and when it exceeded US$1000, it was moved to the time account in multiples of $1000. Separate statements were provided for each account, on different schedules, didn't mention what was happening in the other account, and were difficult to match up. Lots of weird fees, too, including charging commissions on their own time deposits. It all seemed to be about fee maximization.
And this was without doing much in the way of transactions on the account. If you did lots of transactions against accounts like that, it would be really tough to track what was happening. The combination of inter-account transactions and differing statement cycles confuses the issue.
Banks are responsible for fraudulent transactions if you tell them about it in a timely fashion. Banks don't and can't know whether every single transaction is legitimate or not. There's simply no way for them to do so. For example, what if somebody alters one of your checks, for example, to read an amount greater than what you wrote? Assuming a good alteration, there's no way they could know that this is not the amount of money that you intended.
Even in the case of more obvious fraud, it should be clear that there needs to be some kind of time horizon. What if I'm the victim of ACH fraud as this person was, but I don't tell the bank about it until five years after the fact? It's way too late for the bank to do anything about it by then. And in fact this would leave the bank open to different types of fraud. For example, you arrange for a friend to "defraud" your account by some amount, split the money between you, then have your friend seal himself off from the offending account over the intervening years. Then five years later you make a complaint and get your money "back", resulting in a healthy profit for the both of you with little risk.
If we're on the same page about it so far, the question is what that time horizon should be. Well, big daddy government has already answered that for us: that time horizon is 60 days. That's why this guy is still getting $50,000 back from his bank, because that's the amount that was stolen within the past 60 days.
If this guy had noticed the fraudulent transactions in a timely manner then I would agree that we shouldn't blame him at all for failings of the system. But he managed to miss twenty thousand dollars a month leaving his account for well over a year before he figured out that he was being ripped off. He discovered trouble earlier but apparently decided that it was too inconvenient to follow up on. When asked about the discrepancy, the bank told him that their statements were accurate. What was absolutely true! Their statements included an enormous amount of theft that his records did not. But for some reason he didn't pursue these persistent discrepancies, and he is now paying the price for that decision.
If you mod me Overrated, you are admitting that you have no penis.
Seriously with a bit of work it shouldn't be hard to keep track of your financials these days, especially with instant access via the Internet.
You've obviously never seen a private banking statement. For fun, I pulled out my July statement. There were 3 actual transactions on it (not dividend/reinvestment), and the statement was 40 pages long.
These statements really scream "DO NOT READ ME". I'm just sayin'. (Yes, I read and understand my statement, but I can fully sympathize with those who cannot. I needed my banker to go through the first one with me page by page just to understand the thing, and I do not consider myself to be an idiotic or financially illiterate person.)
They don't grade fathers, but if your daughter's a stripper, you fucked up. --Chris Rock