by Naomi Wolf
Well, just when I thought my 'Banks Siding Against the Customer in Bank Fraud' story couldn't get any more shocking -- it did. I had assumed that when I posted the account this week of how WaMu and now Chase were apparently systematically stonewalling customers -- myself included -- who had experienced bank fraud, I might hear from a handful of other consumers. I had hoped thus to see if, indeed, as the insider emails that were handed to me by accident by a WaMu official seem to indicate, this practice is systemic, deliberate and driven -- as actuary (and bank fraud victim) Geoff Kischuk pointed out to me -- by a great deal of profit...for the banks.
I was unprepared, however, for the sheer volume of the stories that readers across America have sent me detailing experiences in which banks collude with fraud, cover it up, protect the identity of the scammer, even from police, or even manipulate customers' bank accounts themselves. These cover-ups are indeed systemic, highly profitable for the banks, and getting worse.
The stories are heart-wrenching: fraud, and banks' collusion with it, ruining young people's credit at twenty-one -- no matter how many efforts they make to clear the record; bed-bound, frail elderly being harassed by banks to pay for fraud the banks know has been perpetrated by scammers; and small businesses finding, as actually Geoff Kischuk himself did, that forty, fifty or sixty thousand dollars have vanished electronically from their business accounts -- and that they must then fight tooth and nail simply to close the accounts, even as fees rack up.
I had thought I was alone in experiencing a bank -- WaMu, and now Chase -- that refused to release video of the one writing forged checks on my account, to the police. When I was handed the inside emails by accident, I saw that their fraud department had actually made note of the person's appearance -- one that confirmed details I had given to the police -- even as they were telling the police the video did not exist! But to my horror I heard from several other consumers that their banks had done the same thing, even in the face of a police investigation.
I had thought I was alone in having a bank that kept passing fraudulent checks even after I had placed a fraud alert on the account -- but several other consumers wrote in confirming that not only had a bank employee opened false accounts in a relative's name -- but after they had called the bank on it, the bank kept clearing their stolen checks!
Well, I certainly now felt less alone -- but far more outraged and alarmed, on behalf of all of us, especially those most economically vulnerable; for the big picture, put together, looks far, far uglier than even my own disturbing experience had prepared me to see.
There now appears to be a major business of banks profiting to the point of colluding with fraud (bank fraud and identity theft is over a billion-and-a-half dollar "business" every year); this is made even more alarming because it is so insidious -- many banks now manipulate customers' withdrawals in time sequence and give customers a misleading balance figure that does not show their recent withdrawals. Thus, in both ways, the bank can and does hit the customer with far more overdraft fees. This is not a mini-industry, as I reported earlier this week; I now see this is a mega-industry.
'Go green!' urges your bank. But an IT expert wrote me warning that I should let people know that they should not use Windows to do online banking unless they are very computer-savvy: "Banks and mutual funds encourage you to do your finances online because it benefits them but it puts your account at risk," he cautioned. He directed me to this Washington Post investigation. "This terrifying link explains technologically what happened to Kischuk, to me and so many others: hackers can easily wipe out tens of thousands of dollars from your account, and even cover their tracks; and, since the banks are making so much money from this and other forms of fraud, it is not in their interest to alert you to how easily this is done, once you are banking online."
Many others who wrote to me have also been charged by their banks for the fraud that the banks know was committed against them. 'Economike' encountered fraud -- and his bank charged him the legal fees incurred, as well as hundreds of dollars for the fake duplicate ATM card involved. 'Indyfem' writes that "A few years ago...someone stole my checkbook from WaMu and wrote a check to themselves for $500." She notes that the signature looked nothing like hers, and where the amount was supposed to be written in ('Five hundred and no/100 dollars') the forger wrote 'Basketball.' B UT WAMU cashed the check and then refused to reimburse her. 'Peacein09' notes that Chase is now giving him problems in this regard; and indeed, a whole website, Chasesucks.org, has arisen to detail Chase's mistreatment of customers in these and comparable ways, and to warn them of new scams. 'Jerrygates' writes that "WaMu and JPMorganChase have destroyed my confidence in banking...permanently." He adds,"I do corroborate her [that is, my] citation as sound and truthful. I have been there." 'Peacekitten' had to fight for years to get back the "thousands and thousands over a period of years" wiped out from her account at Wells Fargo.
I thought I was the only one who had ever had to fight to close a corrupted account -- but many other consumers had had the same experience. 'TNLcaller' also found that "my bank wouldn't let me close the account" after fraud had been identified. Another reader wrote to me that when she tried to close an account with twenty dollars in it at CitiBank, "they fought me tooth and nail to NOT CLOSE the account..." 'Davmyy' wrote that a Wells Fargo (notice any recurrent names, everyone?) banker whom his son knew opened two accounts in his son's name without his son's permission, committed fraud, and his son not only got no action from the bank regarding the fraud, which they were not contesting, but later saw the same employee in a new position in another branch!
This to me, in a sense, is the most chilling of the accounts I received, since it dovetails with my own otherwise-inexplicable experience of the bank actively protecting their own employees at WaMu who had kept cashing forged checks on my account for months after I had alerted the bank to the fraud. It may explain the weirdly relaxed tone of "sure, we know that someone messed with this customer's account, whatever, have a nice weekend" in the insider WaMu emails I received and that Chase is now trying to shrug off. It is stories like this that illustrate the nature of corruption and how it spreads within an organization; you start with passively benefiting from others' wrongdoing -- but if the money is good enough, you develop subtle systems that slowly let you collude more actively in the wrongdoing, the profit, and...the cover-up.
Could it be that policy-approved 'passive' stealing or proxy stealing -- by enabling fraud to continue, and encouraging customers to switch to an easily hacked bank medium without warning them -- is so systemic that banks have, consciously or not, developed a culture of protecting actual thieves in their ranks -- thieves who might blow the whistle on all these practices, if called out?
A secondary but still major issue I discovered through readers' alerts -- that of people's accounts being manipulated by the banks themselves to raise their level of overdraft fees -- is so prevalent that that legal firm Zimmerman Reed devotes a whole part of its practice to it now. According to their website, banks are routinely reordering your charges on ATM or debit cards so that the largest comes first, even if you made it last: that is, if you have a hundred dollars in your account, and make purchases of ten, fifteen, thirty, fifty and ninety dollars, the bank will switch the order so that instead of facing one $40 overdraft fee, you face four.
'Iric' writes that Chase gave him a balance showing an amount that left out his withdrawals made many days before; he reasonably enough believed the money was there; then they processed the withdrawals, out of order, hitting him for fees. 'Thmsnnn' wrote that "I have had similar experiences with delayed credit posts to my account"; this customer has been charged hundreds if not thousands in extra fees in the course of five years. 'Trgrampictures' notes that "Wachovia systematically holds deposited checks for up to fourteen days" and that "B of A delays and then accelerates transactions that result in overdraft fees....Wachovia intentionally holds checks too in an effort to initiate overdraft fees."
Others note that they have not been able to get their banks to show them the rates on their accounts. 'Harry Wallace' notes that banks can increase mortgage payments by a few dollars on the anniversary date, but that banks are stealthily raising mortgage payments by twenty or thirty dollars several times a year; he notes that when one makes payments on the principle of a mortgages, it may not be recorded. "And the bank won't show records unless you are in court." 'Joe Dex' notes that every time you put in to modify a loan, the bank gets $500 -- which explains why banks ask you to resubmit the application four or five times. And so on.
Other readers astutely point out something I can confirm in my recent visit to Europe: pretty much every EU bank customer now uses an ATM card with a chip, PIN number and photograph that make it almost impossible for a third party to misuse it (indeed US bank debit cards, without those security systems built in, are not accepted in many places in Europe for that reason, even if it is drawn on a global bank with local branches). Why do we not have access to such secure debit cards here? Why indeed: look to the bank lobby, that influences our legislation in a way it cannot in Europe. Banks in Europe lose, along with the customer, when there is fraud; banks here? It's a billion plus dollar party annually, and the banks have invited themselves.
It will take quick action to prevent this situation from worsening, especially as banks are now frantically working to skirt new regulations put into place over the past year and a half. Consider potential legislation in Oregon, proposed by the Oregon Bankers Association last session and sent by an industry insider, that would have given fraudulent powers of attorney the benefit of the doubt in fraud claims unless the customer -- rather than the bank -- could prove fraud had occurred. Needless to say, this is a near impossible task for average consumers. Surely Oregon isn't the only state where banks have similar ideas (a similar policy also exists in California, per CA probad code Sec. 4303, which allows third parties to rely on anything that appears to be notarized -- an easily forged act).
We are up against powerful interests; but just as powerful is knowing the aggregate of all these stories. As awful as it is to learn the truth about the big picture, it is good to warn others -- and best of all to know that none of us is alone
Saturday, September 4, 2010
Banks Complicit in Fraud
Naomi Wolf: Banks Complicit in Fraud -- Is it Systemic?