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Banks Helping Bad Guys Commit Fraud

June 17, 2013
Plain English Version

Telemarketers prey on older people and many younger people as well. They may call you up and offer you an upgrade on a credit card. Or ask you to update your health insurance policy. All they really want from you is your bank account number.

Anyone may be targeted for Internet, mail and telephone fraud. The federal government says banks across the nation help these bad guy companies and individuals do their crooked business.

Banks are supposed to know their customers. They should take action when they see unusual flows of money going out of consumer accounts to well-known scammers. The trouble is the banks are making money on this business.

For example, from 2007 to 2009 Zions Bank in Salt Lake City, Utah sent $39 million from customer accounts to bank accounts in Canada, India and the Caribbean. This resulted in insufficient funds in thousands of accounts. The bank was able to charge those accounts $20 million in overdraft fees.

During those years, tens of thousands of Americans complained to the authorities. The federal government has brought a criminal case against Zions Bank. The lawsuit says Zions Bank, “Gave fraudulent marketers direct access to every bank account in the United States.”

A bank official said, “Every red flag went off in my head.” He did nothing because the business was a “gold mine.” Another bank official said, “Turning them off and sending them elsewhere is not an option.”

The government says banks must not only know their customers, but also their customers’ customers. This case is a warning to the industry.

When buying over the Internet, telephone or mail from a company you do not know, practice buyer beware!

Source: The New York Times

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