Banks Accused of Allowing Fraudulent Withdrawals

For criminals to use the ACH system to steal money from your bank accounts, they must have access to the banking system. Some criminals have been able to get that access by using third-party payment processors and banks that have turned a blind eye to suspicious activity. Last November I reported on First Bank of Delaware and the penalties it received from the FDIC and the Justice Department. According to the Justice Department:

First Bank of Delaware violated the Financial Institutions Reform, Recovery and Enforcement Act (“FIRREA”) by originating withdrawal transactions on behalf of fraudulent merchants and causing money to be taken from the bank accounts of consumer victims. The government alleges that the bank knew – or turned a blind eye to the fact – that consumer authorization for the withdrawals had been obtained by fraud.

Another bank has recently been accused of allowing fraudulent merchants to steal money from consumers, and it’s a much larger bank than First Bank of Delaware. In a recent article, the New York Times identified Zions Bank as one of these banks. The NYT reported to have reviewed “newly unsealed court documents”, and according to the NYT:

The documents, as well as interviews with state and federal officials, paint a troubling picture. They outline how banks profit handsomely by collecting fees while ignoring warnings of potential fraud and, in some instances, enabling dubious merchants to prey on consumers.

The “dubious merchants” often prey on seniors. The NYT article described how one telemarketer was able to trick a 83-year-old man into divulging his bank account information. That telemarketing scammer then was able to withdraw funds from the man’s bank account using a third-party payment processor which had an account at Zions Bank.

First Bank of Delaware and Zions Bank aren’t the only banks accused of allowing this type of fraudulent activity. According to the NYT, the Justice Department is “considering civil and criminal actions against a number of banks.”

The one important tip for consumers is to never give bank account information to anyone who calls. Also, be sure to regularly monitor your bank accounts for any suspicious activity.