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One More Reason to Pay Close Attention to Your Bank Account


You only need to read the headlines to know that the unthinkable is well thought out by someone you might not expect, like a bank or credit union employee.

Recently James Roy Entzminger was in the news. A federal indictment accused him of stealing about $527,000, by making unauthorized transactions while a teller for a credit union in Arizona. According to published reports, he was charged with nine counts of embezzlement, fraud and aggravated identity theft for criminal activity allegedly committed from 2009 through 2014. He allegedly picked multiple people who had little used accounts and made cash withdrawals, transferred money between accounts and changed addresses in credit union records so they wouldn’t get statements.

It’s a tale worth taking note of. Stuff happens. “This is a rare occurrence, but it obviously does happen,” says Jef Henninger, an attorney that handles white collar crime.

If you find yourself in the unfortunate position of being a victim, “Your right is to question any transaction you do not recognize after it has posted on your statement within 60 days of the posting and report it. The bank must investigate and if the investigation is going to take longer than 10 days (20 days for new accounts opened in the last 30 days), it must issue a temporary credit. However, I suggest that in cases of employee fraud, the onus is on the bank, not on the customer. In order to hold you responsible, your bank would have to show that if you notified them before the end of the 60-day period, the transactions would not have occurred. At any rate, in a case like this, I would expect full credit for any lost funds immediately upon discovery of fraud by the bank, which could be even before the customer noticed it on a statement,” says Linda Sherry, director of national priorities for Consumer Action.

in cases of employee fraud, the onus is on the bank, not on the customer

While for sure this messy situation is a pain in the neck, the onus is on the financial institution, not the customer. “That is why they carry fidelity bond insurance. They could also be sued, although the case might be required to be handled in arbitration depending on the consumer contract with the bank. The bank or credit union typically has fidelity bond insurance to protect itself against employee theft. This is in addition to FDIC insurance (banks) or National Credit Union Administration insurance (credit unions). If the employee is prosecuted, and sentenced, restitution probably will be required to the bank or credit union. However, this is not dependent on the customer getting their money back,” says Sherry.

Don’t dilly dally. “Banks and credit unions are liable for the full amount of any employee-instigated fraud, less the $50 liability assumed by the customer. This can change if the customer fails to address the situation in a timely manner,” says Chris Moon, a banking analyst with ValuePenguin, a company specializing in financial research.

Doug Johnson, senior vice president, payments and cybersecurity for the American Bankers Association, says, “If the bank detects an insider threat, or notices unauthorized transactions, the money is fully reimbursed. You are harmless due to electronic transaction protection that come from Regulation E. If you notice before the bank, you must tell the bank as soon as you see it. You are more likely to detect than the bank.”

Furthermore, says Sherry, “Call the bank, and if they string you along at all, complain to the CFPB and consider getting a lawyer to write a letter.”

Protect yourself

There’s no guarantee you can stay out of the clutches of determined employees, but you can do your part. “The key is to make sure it is caught right away.  Always know how much money is in your account.  If the balance is different, you should be able to pick up on that right away.  You should also look at every bank statement to make sure you recognize every transaction.  Dispute any transactions you don't recognize. Accounts that are infrequently used are particularly vulnerable.  Run some transactions through the account to generate activity.  Also, check your statements each month even if you don't use the account,” says Henninger.

Accounts that are infrequently used are particularly vulnerable

How to best protect yourself? “Leverage online banking. Don’t wait to get your monthly statement, monitor your account, weekly, or daily if you are more comfortable with that,” says Johnson.

Then too, sometimes what happens is that an account that’s infrequently used will be targeted by an insider because it’s inactive. “My advice is to consolidate accounts. Don’t have accounts lying dormant. You don’t want anything happening to your money. While you will get your money back, you don’t want to have it unavailable to you for even a short period of time,” says Johnson.

Maybe you’re wondering if employee theft is on the rise. Johnson doesn’t think so, “It’s fairly consistent, though I have no data to support that, it’s just what I hear as head of cybersecurity.”

He says, increasingly, financial institutions are getting better at detecting threats and preventing people who have done such acts from becoming an employee at another financial institution. ”This will help counteract the problem. This is an authority we’ve had since 9/11…We have gotten better at refining the process of alerting other institutions when we have fired someone for a certain crime. We don’t have to wait until they have been sentenced or fired to get the word out about them.”

deplorable 1
deplorable 1   |     |   Comment #1
I keep tabs on all my accounts regularly as in at least once a month just to update the totals and see that everything is ok. I have been having a problem with NFCU though. I recently opened the account to get that 17 month 2% CD deal. I have been locked out of my account twice now for multiple login attempts(not done by me!) and have had to reset my password twice! I don't know what is going on over there but this has never happened to any of my other 30 bank accounts ever. They are trying to make like this is somehow my fault for not having a strong enough password. I think it may be my user name that is probably close to someone else's who has a fat finger and keeps trying to log on and locking me out. Any ideas?
Xuim   |     |   Comment #3
ask for a different username? don't know why there is no encouragement of "strong" usernames
Nothing   |     |   Comment #6
Paper statements work quite well...w/o cost
dasave   |     |   Comment #12
Same thing happened to me twice, so I think it's probably a problem in their system. However, per navy rep's suggestion, I changed my password the first time, and it worked for about a month. Then
it happened again, and I tried to change password, but I couldn't seem to pass their 'robot' test, so I had to call them to help me. I didn't make the password any stronger, as I tend to make it pretty strong anyway.
deplorable 1
deplorable 1   |     |   Comment #22
I'm going to change to a strong user name but I do also think something is up with their system. At least I know It's not just me. It doesn't give you confidence to lock up too much cash with them though or at least any money you might need quickly. As soon as rates go back up I think I'm sticking to banks for the most part as I have had very few issues with them over the years.
Bozo   |     |   Comment #2
"Also, check your statements each money even if you don't use the account,” says Henninger."

Trying to check my statements "each money" without success. Perhaps the author meant "each month".
Carl   |     |   Comment #4
Brilliant conclusion....absolutely brilliant.
Bozo   |     |   Comment #5
In a prior life, I was a proof-reader. Back when both editors and proof-readers existed. These days, spell-check can result in weird errors.

Some of my favorites appear, believe it or not, in the New York Times. As I am retired, and now have the ability to read the Times each day, basically from front-to-back, catching typos and errors has become somewhat of a hobby. I am often amused, and seldom disappointed.

I am often tempted to circle the most egregious errors in red pen and fire them off to the editorial desk. Alas, I suspect there is no longer an editorial desk, or even an editorial inbox, at the Times.
Nothing   |     |   Comment #9
Bozo, on your recent Forum post...Like taxing 85% of Soc Sec., taxing all distributions (and requiring them) from Roth IRAs is the next step...starting at 50% as Reagan did and move to the 85% number with offset to some degree based upon income, like Soc Sec!
Bozo   |     |   Comment #10
Nothing, means testing is not a huge issue for me. Social Security is already means-tested. Moving from 85% to 100% is not a huge issue. The larger issue is the FICA cap. Should the FICA apply to all wages, without regard to limit?

Mind you, this is a question which reverberates back to the days of FDR. Social Security was touted as "insurance", not welfare. The basic concept was, you pay in, you get out.

Once the cap is lifted on FICA, one could logically argue that higher-earners should receive higher benefits. Good luck on that.
Nothing   |     |   Comment #11
Not during the Trump watch...hits where he is from
Bozo   |     |   Comment #15
Nothing, there are many roads to Dublin, so to speak. Abandoning the mythology that Social Security is some sort of "lock box" or "trust fund" would be a good start.
Nothing   |     |   Comment #16
Pretty good annuity...as your wife would attest
Nothing   |     |   Comment #17
PS and prior to Soc Sec and RMD, taking as much from IRA or pension so that that taxable income is minimal and after tax resources/assets are very nice. PPPPPP
orangeclown   |     |   Comment #20
I can't believe people are converting to a roth thinking their tax future is going to be better in 10.15. 20 years. The nation's debt will be so out of control the gov will be taking money from everywhere
Nothing   |     |   Comment #21
Clown: Agreed! I take from trad. ira and not convert. If the gov't can go after soc sec, roth is fair game to "them". Capital, after tax and outside an ira/sheltered environment, is a choice in low rate times.
Ken Tumin
Ken Tumin   |     |   Comment #13
Yup. It should have been "each month". It's now fixed. Thanks.
happenstome   |     |   Comment #7
And many of the programs in our computer change words as or after you write something.
also   |     |   Comment #8
Patelco CU also had similar incident and the teller was sentenced last month to 2 years 7 months of jail.

Att   |     |   Comment #18
You need to check any invoice or statement . I recently had surgery as an outpatient. The hospital billed me $3800 for out of pocket. My wife went over the EOB and the bill should have been $1800. After 3 months working on this the bill was corrected to $1800. I received notices I was over due even calling weekly on updates. My young daughter was double charged and when I had corrected they ADDED more charges. After a year I got this fixed in my favor. A week after settled got a letter that I was no longer in collections. No one even notified me I was in collections.
Nothing   |     |   Comment #19
Talk to an attorney about defamation action...should be a slam dunk!
NEG RATES NOW!!   |     |   Comment #23
THE MEGA-BANKS ARE JUST TOO LARGE TO MANAGE,,,,their rustic branch stores staffed with inadequately trained cronies and the small state chartered banks are worse, since they have too often second rate GFIS software .,,and staffed by even lesser qualified customer servants especially in fly over country branches,, and double for credit unions. IF YOU ARE A MULTI-PLATFORM GADGETEERING TYPE,,,,,,YOU DESERVE ALL THE MURPHY'S THE LAW PROVIDES......... KISS!

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