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Silicon Valley Bank Is Shut Down - Second Largest Bank Failure in HistoryWatch Your Bank Account - the ACH Penny-Deposit Scam
POSTED
ON BY Ken Tumin
This Air Force News article describes the case of an Airman who was a victim of a crime that used ACH transfers. The criminals used software to execute one-cent deposits into random account numbers. If the one-cent deposit clears, they know they have a valid account, and then they proceed to make withdrawals. In the case of the Airman, he had over $600 withdrawn from his account.
The good news is that once the Airman contacted the bank manager, they refunded him the stolen funds. However, the Airman wasted a lot of time trying to track down who made the ACH withdrawals. As you would suspect the criminals were able to make the transactions look like they were from a legitimate business. When the Airman finally tracked down that business, he found out that he was not alone. The business had received about 100 calls from other victims.
So the best way to protect yourself is to check your accounts at least once a month. Avoiding online banking won't help since brick-and-mortar bank accounts are no different than online accounts in that they can have the same ACH transfers applied to them.
Regulations require banks to reimburse you for fradulent transactions if you report them in time. So the banks are the ones that have the most to lose, and perhaps that's why many have set up blocks against ACH withdrawals initiated from the outside. Banks that I know of which do this include ING Direct, E-LOAN and recently Emigrant Direct.
A few years ago I had a mysterious two-cent deposit to my credit union money market account. It was labeled as if my insurance company, Humana, had made the deposit. The credit union couldn't provide any more info, and my attempts to track down the source at Humana proved to be a waste of time. Luckily, there were never any unauthorize ACH withdrawals. I ended up closing this account a few months later.
ACH Overview
For those not familiar with ACH it stands for Automated Clearing House and is used to make electronic deposits and withdrawals from bank accounts. Direct Deposit is one example of an ACH deposit. ACH withdrawals are often done to pay for bills. Many online banks allow customers to initiate ACH transfers to and from their accounts at other banks. For more info on ACH, please see this Wikipedia ACH reference.
The good news is that once the Airman contacted the bank manager, they refunded him the stolen funds. However, the Airman wasted a lot of time trying to track down who made the ACH withdrawals. As you would suspect the criminals were able to make the transactions look like they were from a legitimate business. When the Airman finally tracked down that business, he found out that he was not alone. The business had received about 100 calls from other victims.
So the best way to protect yourself is to check your accounts at least once a month. Avoiding online banking won't help since brick-and-mortar bank accounts are no different than online accounts in that they can have the same ACH transfers applied to them.
Regulations require banks to reimburse you for fradulent transactions if you report them in time. So the banks are the ones that have the most to lose, and perhaps that's why many have set up blocks against ACH withdrawals initiated from the outside. Banks that I know of which do this include ING Direct, E-LOAN and recently Emigrant Direct.
A few years ago I had a mysterious two-cent deposit to my credit union money market account. It was labeled as if my insurance company, Humana, had made the deposit. The credit union couldn't provide any more info, and my attempts to track down the source at Humana proved to be a waste of time. Luckily, there were never any unauthorize ACH withdrawals. I ended up closing this account a few months later.
ACH Overview
For those not familiar with ACH it stands for Automated Clearing House and is used to make electronic deposits and withdrawals from bank accounts. Direct Deposit is one example of an ACH deposit. ACH withdrawals are often done to pay for bills. Many online banks allow customers to initiate ACH transfers to and from their accounts at other banks. For more info on ACH, please see this Wikipedia ACH reference.
It took me long time for my bank to reverse the charges.
Zecco has not yet admitted their mistake,
There also has been other abuses of ACH. The article mentions telemarketers who do improper telephone-based authorizations.
Doesn't that expose everyone writing a check to ACH fraud?
Most of the fraud cases, the victims gave their account numbers, but in a some cases "the bank account numbers were simply obtained and debited without even contacting the victim."
Looks like I'll have to do more investigations into ACH and what protections are in place. As has been mentioned, with checks listing all of the account details, it seems this would make it easy for criminals to access your account. It's probably best to limit check payments to only those who you trust.
877-754-7499
877-687-0661
This is the company that hit me up for $0.01 this morning:
POS DEBIT WEINFELD SKULL CAP MANU BROOKLYN NY $0.01
Thus, after your bank corrected the problem, what did they do to remedy it in future? Report to regulators, cease doing business with cooperating bank, report to fbi, etc? And why would anyone (you) continue to do business with them if they had inadequate controls in place and nothing to indicate corrective action in the future?