Truth is stranger than fiction. Especially, when we are talking about how banks (you know, the industry that basically tanked four years ago and you and I bailed them out, only to have them stab us in the back) are putting the screws to their customers. No, I am not going to talk about some new fee, how they change their policies willy-nilly to cost us money. Nope! I am going to explain how the banks save money- and put us at risk.
Take a look at your checking account. You know- those numbers at the bottom of your check. The first set identifies your bank (ABA routing number). The next set is “your” account number. The last set (not all banks use these) identifies the check number. Notice that I use quotes around YOUR? That’s because banks routinely recycle those checking account numbers.
Say you had a bank account at Chase or Citicorp in 2005. When you were living in Buffalo. You moved to Charlottesville, and those banks were no longer convenient. So you opened an account at BankofAmerica. And, you are a hoarder and saved your old checks. (Or, you just loved those check designs, so you saved a few.). And, just for funsies, you wrote a check on those defunct accounts to buy that exercise machine over which you’ve been drooling for months. No problems! Because you can bet your newly toned body that some Bob or Debbie has that very same account number…and is now $800 poorer, because your check went through on their (your old) account number.
Nope! It’s not illegal for the bank to have done that. And, it’s not something new under the sun, either. They have bee recycling bank account numbers forever. Unless you live in California. But, ever so helpful, the legislators only demanded that banks wait 3 years before they resort to this nefarious practice. That is not nearly long enough, as many unsuspecting bank customers are finding.
The banks claim that it’s just too difficult to add two digits onto the bank account standard, to let them stop this practice. Like 16 digits really can’t handle all those accounts. After all, we are supposed to believe that each of these banks have issued 2.092 trillion accounts already. And, that their $141 billion in profits is not enough to handle (assuming they HAVE issued 2 trillion accounts) a few million implementing an 18 digit standard. (I remember my bank renumbering my account by adding 4 leading zeroes less than 20 years ago, making my account 16 digits..When the banking profits were much lower!)
And, why would the bank ever check that the signature matches the one on file? You know, the one they demand from you every time you enter the bank to talk with someone (after waiting 30 minutes to reach that one “customer service representative” on duty).
You better start checking every monthly statement, because these same banks will not return any funds for these (not legally) fraudulent checks, if they are older than 90 days!
Wow, with all the safe guards that they do to “protect us” then they keep old account numbers and give them to other people. Scary!
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Yes, this was most disconcerting, Shawn.
This looks like a post for my ISO risk/problems area. Why do these entities insist on screwing us repeatedly? Oooh, that’s nasty. So are banks.
Ann Mullen recently posted..Free Senior Care Guide: The 5 Most Common Age-Related Eye Problems
I guess, the simple answer is because they can, Ann. They scare the regulators away from protecting us as they should be doing.
WOW I had no idea! I better go make sure I closed out all those old accounts and make sure they are really closed! Is there any way to protect myself from this happening for accounts I forgot to close?
Actually, Janet, the issue is not whether you close them….But, did tge bank give you a virgin bank account number of not.
That’s the least of the problems….all it takes is a bank worker to put in the number slightly wrong (just 1 digit) when someone is setting up direct debits for someone else and before you know it your account is losing money and it takes ages to convince a bank you haven’t organised it….then it takes even longer to get your money back, and still longer to get them to remove the fines they imposed because your account was overdrawn
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I think those transactions are made by the user…but they normally verify the accounts before they suck any funds out.
I always walk away feeling so upbeat after reading your articles. I had been thinking of opening a BofA account for my wife’s social security because she could make no-cost atm withdraws at certain banks in Mexico. I already have a ten year old account with another bank that owns a part of a bank in Mexico so I will stay with that. Now I must rethink how I will handle my wife’s account.
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I am sorry, Chef William…But I thought the warning about potential harm outweighed the negativity.
That is shocking and utterly immoral. Can you not claim the money back?
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It seems they impose a 90 day window, Caro!
RT @RAAckerman: Surprise! You’re Sharing!: http://t.co/ETz1y68OJI #in #blogboost #blogtribe #tlcclub #bank #fraud #checking
RT @RAAckerman: Surprise! You’re Sharing!: http://t.co/ETz1y68OJI #in #blogboost #blogtribe #tlcclub #bank #fraud #checking
Thanks for that great RT!
That’s amazing. I never knew that. Thank you so much!!
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Neither did I, Carol…
Thanks for the comment and visit.
Ok, now I’d like your take on the signature line. Someone had me use a magnifying glass and the line is actually some sort of legal wording in itty-bitty print…. Who’d have known!
That’s brand new to me, Alessa. And to a few if my clients, who print checks.
Now that’s a little frightening. I think about how many times we’ve moved over the years and never knew about this practice. Thank you for the heads up!
That is exactly why I wrote the blog. I believe that forewarned is forearmed.
I didn’t know that they could do this, Roy. I thought that banks had a duty to protect their clients, but I was clearly wrong!
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Ah, Muriel, we both thought that was the way it worked. What a surprise to find that banks simply take your old account number and give it to someone new- which means there will be problems if they don’t check each signature. (They stopped that practice long ago!)
Fascinating! I wonder if that’s the same here in the UK. Something that *is* the same, is the need to check statements – I’m amazed how many people don’t ever check them!
Cheers, Gordon
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Gordon…
You are absolutely right that most people don’t check their statements. They should do so with their credit cards. I routinely receive (i.e., pay for and don’t receive) charges from firms of which I have never heard nor obtained goods…
Surprise! You’re Sharing! – Truth is stranger than fiction. Especially, when we are talking about how banks (you… http://t.co/22Xw6GtMEK