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My Former Bank's Response To ID Theft Questions

Posted on Feb 17, 2007 by Michelle Pastor

One of my biggest concerns of identity theft is a drained bank or investment account. Years ago when I researched identity theft, I had a lot of questions for my bank.  I asked what my liability would be if someone took money out of my account.  The answer I received was that I would have to prove that I hadn’t given my password to anyone, because, she said, there’s no other way anyone could get my password unless I gave it to them. 

I was shocked at my bank’s stance because I know of various ways that criminals can find out a password and drain an account.  I recently blogged about ATM scams that are designed to do just that.

If I had pressed the issue and talked about my legal rights, I’m sure they would have had to come back with a different answer, but by then it was too late.  I feared that her attitude was one shared by the bank as a whole and couldn’t take a chance that she represented management’s views on identity theft.  I began to think about the “what if’s?”.

What if there had been a data breach by the bank – would the bank admit that there was a problem? What if one of their customers lived paycheck to paycheck and the checks he wrote were bouncing because he had no way to make up the difference until the issue was resolved?  It seems to me that the bank might take their time putting funds back into the account.

What if the bank makes it very difficult for a customer to prove that he is a victim?

The bank representative’s callous and flip answers about such a widespread subject forced me to change banks immediately. Call your bank and ask what their policies are so you’ll know what to expect, should you have to force your rights as an identity theft victim.

UPDATE

I found more information on Regulation E. Banks are mandated to credit an account within one business day after they determine there has been an error but according to the Electronic Code of Federal Regulations (e-CFR), it could take as many as 10 business days for them to investigate and find that it was an error.

Some pieces of the procedures for resolving errors section are:

(c) Time limits and extent of investigation—(1) Ten-day period. A financial institution shall investigate promptly and, except as otherwise provided in this paragraph (c), shall determine whether an error occurred within 10 business days of receiving a notice of error. The institution shall report the results to the consumer within three business days after completing its investigation. The institution shall correct the error within one business day after determining that an error occurred.

(2) Forty-five day period. If the financial institution is unable to complete its investigation within 10 business days, the institution may take up to 45 days from receipt of a notice of error to investigate and determine whether an error occurred, provided the institution does the following:

(i) Provisionally credits the consumer's account in the amount of the alleged error (including interest where applicable) within 10 business days of receiving the error notice. If the financial institution has a reasonable basis for believing that an unauthorized electronic fund transfer has occurred and the institution has satisfied the requirements of §205.6(a), the institution may withhold a maximum of $50 from the amount credited.