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A Victim Again: Fraudulent Home Equity Check

Posted on Apr 17, 2007 by Tom Fragala

Not a good way start to the day. I got a call at work this morning (9am PDT) from someone claiming to be from the Wells Fargo fraud department. I have several accounts at Wells, including checking, mortgage and home equity line. She says there was fraudulent activity using a check drawn against my home equity line: $47 to Pizza Hut.

Immediately bells went off—I don’t trust this person on the phone. You should NEVER trust someone that calls you either (even if the caller ID appears to be from a trustworthy company). Also, I know I don’t write checks on that equity line, so I am quickly trying to figure out in my head how the hell such a check would even be out there

Then, needing to confirm my identity, she asked me to tell her my full Social Security number on the phone! I say, “No way!” I explain to her that I don’t know if she’s from WF or not and I would never give my SSN over the phone anyway. Then she asks for the last 4 of the SSN. My defense shields are all the way up now, so I tell her no again (I want to probe her further, she might be pretexting me at this point, and remember, she called me so I don’t know who she is.)

Then, incredibly, she reads me my SSN over the phone and asked if it was a match!! Before she had actually confirmed who I was! I could have been anyone answering an old phone number. And this was the fraud department of Wells Fargo. After swallowing my tongue, I tell her that I won’t confirm or deny if it was accurate. Then she reads me my home equity line number. I quickly login to my online banking and I discovered she had the correct account number. I told her that any check to Pizza Hut on this account would be fraudulent, but I need to confirm this whole incident with Wells Fargo. I ask her name and what the department call back number is, and hang up. I call it immediately, it rings several times  (no auto attendant), with a odd few clicks in between, and a woman answers, “Wells Fargo fraud department.”  I ask the woman who answers if the woman who called me works there and she confirms it. Now, am I safe in assuming this number and the original call were valid?

No! The original caller might have given me a bogus call back number. I might have just called the Ukraine for all I know.

Now what? For more on what happens next, check back for updates.

Update 1 (2:30pm PDT 4/17/07): Got another call from the Wells Fargo fraud department. A second fraudulent draft was written against my account. But the story takes a different twist. This second check was not a promo/convenience check, but a totally counterfeit check written as a demand draft (no signature required) using the account and ABA routing numbers of the equity line. The payee on the instrument is a well known credit card issuer. So it seems likely this criminal wrote the check to used “pay by check” over the phone to pay off a credit card debt—if so, this is a highly traceable fraud (the WF fraud investigator agreed). Perhaps they wrote a fraudulent check did this to pay down a fraudulent credit card account so they could keep using it; that would be quite clever, but unlikely. The good news is that Wells caught this fraud before the instruments were posted to the account. So, for you fraud geeks out there, this falls under Regulation CC of the Federal Reserve (24 hours to dishonor a draft, no questions asked). Thanks to Wells Fargo fraud department for catching this (I’m not nearly as pleased with Wells Fargo marketing for mailing the checks in the first place. More on that later).

Update 2: (6pm PDT 4/19/07): Still only two fraudulent checks so far. The Wells Fargo fraud group placed a hold on my account on 4/17, so no further activity can take place. And they are sending me a package with a fraud affidavit and a form to transfer to a new account number. It’s supposed to take 5–10 business days to arrive—does that make any sense to you? What if it was a checking account, would they do the same thing?

More rotten news. I just got an alert from my credit monitoring service that says Wells Fargo bank performed a credit inquiry on me (a pull of my credit report)!! This will damage my credit score. Why would Wells Fargo do a credit pull on a fraud victim?! Federal and CA law clearly states there has to be a “permissible purpose” for any credit pull. Let’s recap: I’m a victim of check fraud and they do a credit pull? I have to guess that it has something to do with the fact the account was a home equity line, but it is still inexplicable to me. Is it because it gives them an opportunity to see if my credit status has changed so they can increase the interest rate? So I am an identity fraud victim and my bank uses this as an opportunity to hedge its risk, slamming my credit score in the process. And to make this situation worse, this all happened because Wells Fargo itself mailed me “convenience” checks—not at my request. (Did I mention that the convenience checks have the actual account and routing number on them?) I am furious.

Update 3: (4/25/07) Sorry for the lag in posting updates; we’re very busy here at Truston. A few days ago, as I was readying to file a police report I ran into an issue: I live in the unincorporated part of Santa Barbara county (close the city border), yet the first crime (check to Pizza Hut) certainly took place in the city and the criminal likely lives in the city. I called both the SB Sheriff and the SBPD and they both asked me, as they should, about the location to determine the appropriate jurisdiction. These jurisdictional issues often occur with ID theft. The bottom line in my case is that it is a toss-up: both county and city are reasonable places to file the report. I ended up taling to a SBPD detective who said to file it with them, so I swung down and filed the report yesterday at SBPD. I had already written up a narrative and I have maintained an extensive case log (with copies of the fraudulent drafts I received from Wells). I haven’t heard back yet from a detective.

On Monday 4/23 I received the fraud kit from Wells Fargo. It included copies of the fraudulent drafts, a fraud affidavit and a form to approve closing and transfer of the equity line to a new account number. They are removing the old account and our home equity line will not be accessible for three weeks. Can you imagine if we were in the middle of a remodel and needed the funds? They asked that the affidavit be notarized. There is no statutory requirement for victims to notarize a fraud affidavit. I talked someone at Wells Fargo fraud unit and they confirmed this. They simply want to put a little burden on people when reporting fraud and make them think twice before lying on an affidavit. A little deceptive, yes, but common practice. I sent it in NOT notarized.