Fraudulent Activity Awareness
Authored by: Gary Propheter, EVP & Chief Operations Officer, Bank of Eastern Oregon.
For Newspaper Publication January 2007.
Increase Your Fraudulent Activity Awareness
The banking industry has seen an increasing amount of fraud activity involving customer accounts. I’d like to take a few minutes to help the public protect themselves from risk. Two kinds of fraudulent transactions have shown up more frequently recently: unauthorized electronic checks to checking accounts (often called ACH or Automated Clearing House transactions), and debit card transactions at ATM or merchant point-of-sale terminals.
Regulation E defines the protections given to consumers to protect them from electronic fraud and banks and companies processing electronic items must follow the rules it states. Not only do the rules protect consumers, they help banks and companies conduct proper investigations of claims prior to making reimbursements in order to protect themselves from losses as well. If you boil Regulation E down to basics, it says if you advise your bank promptly about suspicious activity, you will not be held accountable for erroneous charges to your account. In most cases, your bank will refund fraudulently taken monies quickly and protect your account from further attacks. Any fees related to the fraudulent activity would also be reversed.
Unauthorized transactions may all seem the same to a customer, but different types of fraud are often treated differently in the law and in banking regulations. An important factor in each case is how the transaction was conducted and by whom. Give your bank a fighting chance to stop fraud by working with them to identify fraud early. Help your local police agency and prosecutor by agreeing to prosecute: hold fraudsters accountable!
Prosecution of fraudsters may vary by locality. When a perpetrator is known to Bank of Eastern Oregon, we will aggressively provide information to prosecute every fraud case, but we need the public’s help as the customer must file a police report and support the investigation. Frauds originated in other states, or internationally, are rarely prosecuted as the threshold to get state prosecutor or FBI support is very high, often over $100,000 in proven losses.
How can you protect yourself from loss? How can you protect yourself from being a victim of fraudsters? These are important questions with surprisingly simple answers.
Protect yourself from loss:
- Check your bank statements every month to ensure all transactions are valid and report suspicious activity to your bank immediately! Better yet, use your bank’s free internet online banking service and look at your activity daily. Customers generally have up to thirty days from their last statement date to report suspicious activity to their bank in order to avoid liability for future losses.
- Never share your ATM or debit card PIN (secret code) with anyone. Many unfortunate frauds are conducted by someone well known to the customer, often identified by security camera video at ATMs or in stores. Customers are often unwilling to prosecute these cases and cooperation in prosecution is a prerequisite to being reimbursed for any losses.
- Never loan your ATM or debit card to anyone or you may become responsible for every transaction done by the third party. The same is true with checks! In Oregon, if you allow a non-signer to regularly use your account, they can become a de-facto signer on your account!
- Never give a signed blank check to anyone! Always fully complete the information, including the payee name, and don’t leave any blank space on the written amount lines - line blank spaces out before and after the written amount.
Protect yourself from being a victim of fraud:
- Never provide personal or financial information to a third party who contacts you by email or by phone. If you have an existing relationship with that third party, contact them directly using the phone number that is provided on normal correspondence you receive from them. For example, from your bank statement, or look up their number in the phone book. Information requests in an unsolicited email should be looked on with great distrust.
- Legitimate companies will never send you emails or call and ask you to provide personal or account information. Again, if you ever receive that kind of request, contact the company directly through a trusted phone number and verify the request is proper.
- Keep unused checks and bank statements locked away! Never dispose of them in the trash, and shred cancelled checks and unwanted documents whenever possible. Keep financial documents out of sight of casual observers. Thieves sell account and card numbers over the internet and these are used by fraudsters to steal from merchants, customers, and banks.
- Never keep your ATM or debit card PIN (secret code) with your card. Once you’ve memorized your PIN number, shred the mailer! If you prefer, most banks, like Bank of Eastern Oregon, allow you to change your PIN to a number you can more easily remember, free of charge!
The most secure transactions you can do are with your ATM or debit card, as these use artificial numbers (card numbers) that are tied to your account. When you have a problem with a card, access to your account can be cut instantly and new cards can be issued without impacting the bank account itself.
It’s a very different story with check or bank account related fraud. Once the fraudster knows your account number or a thief has stolen your checks, the only way to protect you (and your bank) is to close the account and open a new one. That also means you need to order new checks, which can be costly.
In each fraud case, the customer has additional work to do cleaning up automatic links to their card and accounts. Bank of Eastern Oregon finds that fixing card problems is much easier to accomplish.
All of these things we’ve discussed work great for consumers, but what about businesses? They have all the same issues, but fewer protections under the law. In fact, until the most recent changes in VISA and MasterCard operating rules providing Regulation E type protection for business debit cards, businesses only had the rights to dispute fraudulent activity that were granted within their account agreement with their bank.
Businesses can take advantage of all of the same conveniences provided to consumers, especially online banking. Business owners tend to watch the bottom line and cash flow carefully and checking daily activity can not only catch external fraud, but be a strong tool to defeat that most insidious of thieves, the embezzler.
Bank of Eastern Oregon hopes this information has been of value and welcomes questions, comments, or concerns. Please address these to Gary Propheter, EVP & Chief Operations Officer, Bank of Eastern Oregon, P.O. Box 39, Heppner, OR 97836. You may also email your question to [email protected] for a speedier reply!
About BEO Bancorp
BEO Bancorp is the holding company for Bank of Eastern Oregon, which operates 11 branches in six eastern Oregon counties. Branches are located in Arlington, Ione, Heppner, Condon, Irrigon, Boardman, Burns, John Day, Prairie City, Fossil and Moro. Bank of Eastern Oregon also operates a mortgage division, has loan production offices in Hermiston, Enterprise, and Ontario, and offers brokerage services through BEO Financial Services. The bank’s website is www.beobank.com.