Were Funds Stolen from Your Bank Account ? Here's Why Your Claim was Denied!

If you report the unauthorized electronic withdrawal of funds from your personal bank account and you make the report within 60 days of the statement showing the theft of funds, your bank must reimburse you for the loss under the Electronic Funds Transfer Act. That's one reason bank's blame their customers for their losses. But there's another reason as well.

Banks are required to investigate reports of stolen funds; and, if they find suspicious activity, they must report it to the Department of the Treasury. See: 12 CFR § 1020.320.

That's the law.

Let us know if you think banks comply.

Sometimes they probably do. But too often, instead of investigating reports of financial fraud, banks blame their customer for the lost funds. Because Identity theft and bank fraud are so prevalent, we suspect that it's simply too expensive for banks to investigate every customer claim of fraud. We're betting that the banks have "run the numbers" and determined that it's more profitable to routinely deny customer claims of fraud - saving more in operating costs than they surrender by paying off the few customers who hire lawyers and bring legal action. It's all in their algorithms.

We admit, this is just a theory. But how else do you explain this:

Our client reported twenty-one fraudulent withdrawals from her disability benefits account totaling $20,000 in stolen funds. The account consisted entirely of our client's saved disability benefits and was all the money she had on earth. Nevertheless, the bank denied her claim on the grounds that she had made cash withdrawals from the teller window. A quick look at her transaction record – quick meaning less than two minutes – showed that of the twenty-one fraudulent transactions, only four were cash withdrawals from the teller window. So the bank denied her entire claim based on four transactions.

But here's where the bank goes off the rails: each of the four teller window cash withdrawals - made by our client - occurred between 2:00 and 3:00 in the morning, when the bank was closed to the public!

The Code of Federal Regulations at 12 CFR § 1020.320 was specifically designed to identify and prevent financial crimes. It requires that every bank file with the U. S. Department of the Treasury a report of any suspicious transaction relevant to a possible violation of law or regulation.

So, either each of the four after-hours teller window withdrawals was a normal, non-suspicious activity which need not be reported; or, the bank violated the law. We chose the latter when we filed suit seeking actual damages (the $20,000), punitive damages and damages for emotional distress. Our lawsuit also accused the bank of covering up the theft of our client's disability funds by bank employees.

This is the most glaring example we have seen of a bank's failure to investigate and report suspicious activity, but others are close. Close enough to suggest that banks may prefer protecting their bottom-line to their customers interests and to following the law.

Let us know if you have questions. (877) 320-2380