Tim@Backhome.org wrote:
>> The other is that if they can get your bank account and bank routing
>> numbers, they will monitor your account a while and at a peak, they
>> will drain it with an ACH transfer through a Nigerian bank that works
>> with them (for a cut of the action).
> Under federal law pertaining to electronic transactions, your bank has
> no choice but to charge the electronic debit back to the originating
> bank so long as you notify them on a timely basis that you did not
> authorize the transfer.
As a practical matter they seem to have at least one other choice:
they can simply claim that the debit was in fact authorized. That's
certainly the response I've received when I've inquired about ACH
debits. Now in my case some of those debits were the result of check
conversions that were made without prior notice. (Yes, I'm sure.
Yes, I read and keep the fine print.) But my banks claim that prior
notice is no longer required because of Check 21. (Yes, I know that
doesn't make any sense. They also claim that Check 21 precludes their
blocking ACH debits in the first place. This seems to be a fairly
well-coordinated lie since I've heard it from five banks now and
others have posted about similar experiences.)
One debit actually showed up on a passbook savings account (I thought
that was prohibited) and that (different) bank tried to argue that it
must somehow have been my doing. The only thing that saved me in this
case was the fact that the account was being used as an escrow with
the city and required a signature from someone in the city treasurer's
office (in addition to mine) for any withdrawal. When I told the bank
that I hoped they would be able to come up with a signature slip with
two signatures so I could show the city, they suddenly realized that
there had been a "coding error".
IMHO, Regulation E makes it awfully easy for an ACH debit to have been
authorized and awfully hard for a consumer to prove that it was not in
fact authorized. States like Massachusetts make things worse by
explicitly defining an EFT transfer to be unauthorized only if the
payer receives no benefit (not even qualifying "benefit" with
"material").
> If the Nigerian bank won't accept the charge-back they are supposed to
> be removed from the ACH. If they don't accept the charge-back your
> bank has to ultimately eat the charge.
Assuming that the victim does not lie to their bank (i.e., assuming
they disclose that they were engaged in a plan to move money in and
out of the country and that they had given their account and routing
numbers to their Nigerian contact) would the bank really not be able
to argue that the ACH debit was authorized? What if the Nigerian
contact has a convenient tape of the phone conversation where the
victim provided the numbers? (I'm sure the exact details of what was
to be transferred could be edited ...)
> Dan Lanciani wrote:
>> I wonder who actually ends up paying in cases like these? Are there
>> any posted accounts that tell whether the bank absorbed the loss? Or
>> whether they were able to pull the money back? These might provide
>> some ammunition to argue with banks that universally refuse to block
>> ACH debits on consumer accounts (as that would be inconvenient for
>> businesses) and claim that they can clean up any fraudulent withdrawals
>> after the fact.
> The banks love to act like innocent conduits when it comes to any issue
> about ACH debits.
They'd be a lot more convincing in their innocence if they allowed
consumers to block ACH debits in the first place (just like businesses
can) rather than making up stories about Check 21's preventing them
from doing so. Or if they at least disclosed on your statement the
bank & account number where your money actually went. (Two of my
banks don't even provide a reference number for the transaction!)
And it's not just banks. After months of "research" Fidelity finally
confirmed that they allow ACH debits from any account even if it does
not have a check writing feature. (Initially they had told a familiar
story about Check 21's requiring them to allow ACH debits because you
might have written a check on the account, but I kept reminding them
that I hadn't said anything about checks.)
I don't know if this is a unique situation for Fidelity, but because
of the way they handle checking with their affiliated bank, the
construction of a "checking account" number from a brokerage account
number is fairly simple. (Prepend some digits, change some letters to
numbers.) They said that it would be too expensive to maintain a flag
on each account to control ACH debit access (seriously, that's what
they said) and industry standards do not require them to do so in any
case. Naturally they will not put any of this policy in writing.
They claim that it is my responsibility to inform everyone that I do
not want to debit my account to not do so. Yeah, right.
> Nonetheless, with any given transaction, if the account
> holder affirms on a timely basis that it's either fraud or simply not
> authorized, the bank has no choice but to charge it back.
> Banks hate the concept of consumers knowing that.
I'll bet they do. But just to be clear: are you saying that the
consumer has the unilateral right to determine that any ACH debit is
unauthorized, regardless of the other circumstances? (Without
asserting that he has never heard of the payee or that the payee has
no claim under some legal theory, but simply that the transfer itself
was unauthorized.) And that by doing so the consumer can cause his
bank to permanently (not just temporarily during the investigation)
return the money? I don't mean to sound overly skeptical, but if this
is true than (a) a lot of people are making up stories about not being
able to recover money (or at least having a great deal of trouble
doing so) from, e.g., long-canceled ISP services and (b) the variation
of the Nigerian scam under consideration just wouldn't work. I can
buy that the Nigeran "ACH scam" is just an urban legend, but the other
problems seem too frequently discussed to be total fantasy.
Dan Lanciani
ddl@danlan.*com
Dan Lanciani (ddl@danlan.com)