liability for fraudulent HELOC draw?

[FinanceGeek]

Many on this forum advocate opening a HELOC before retirement. But the consequences of a thief making a fraudulent withdrawal on that line of credit seem very high...

• Locking your credit guards against a thief establishing a HELOC in your name, but not against stealing from an HELOC that the homeowner has already opened.
• The Fair Credit Billing Act limits consumer liability for unauthorized charges on a credit card to $50. This law doesn't apply to HELOCs, unless (maybe) the unauthorized withdrawal was made with a linked credit card.
• There exists a law (Regulation E?) which limits consumer liability for unauthorized EFTs as long as the account holder reports them to the bank promptly. I think its 30 days. But this would not cover a HELOC unless an EFT was involved. Virtually all HELOCs permit withdrawals via cashiers check or a special checkbook.
• You can buy identity theft insurance, but the coverage limits are an order of magnitude (or two) less than the amount of money that could be stolen from a HELOC.

Having a HELOC sounds like a high risk proposition, unless you can get the bank to agree to limit the means of accessing it to EFT or credit cards. And even then because a HELOC is involved you may not get the protections of Federal law.

What am I missing?

 

[Newventurer]

I get what you are saying, same goes for your automobile and other belongings - yup, things can be stolen. I look at my statements monthly, hide the checks, hope for the best.


https://www.bankrate.com/finance/home-equity/id-thieves-target-home-equity-lines-1.aspx

 

[Bestwifeever]

Do you have citations of actual cases of this? I did a search and all the results but one that have to do with actual heloc fraud involve stealing from a financial institution by submitting a falsified application for a heloc. The single case that does come up is from a 2008 arrest involving those darned Nigerians. There are articles about potential fraud, mostly from sources with a vested interest in scaring people imo, like identity theft protectors or mortgage associations etc., but they do not include specifics about real cases. It would be interesting to see hard statistics about specific thefts from people’s helocs.

I imagine it “could” happen, as most of the articles are worded, but I would put this potential problem on my list of things not to worry about. Then again, we haven’t had a heloc or a mortgage for a long time....

 

[jazz4cash]

I recall in the housing bubble days people were using Helocs for overdraft protection for their checking accounts. It’s an interesting concern. I think I’ll call my lender to review their policy. I really don’t need to have bank checks lying around anyway.

 

[Souschef]

I do not have any exact numbers, but I think the number of credit card holders far exceeds the number of HELOCs.
The whole phishing game is to get someone to give them their CC number.

 

[jazz4cash]

I do not have any exact numbers, but I think the number of credit card holders far exceeds the number of HELOCs.
The whole phishing game is to get someone to give them their CC number.

Maybe I’m not clear on your point, but don’t some HELOCs have a credit or debit card for access? I’ve had both credit and debit cards get hacked.

 

[Ed_The_Gypsy]

We got a HELOC about 4 years ago. Our bank originally gave us a credit (debit?) card to draw on it but recently canceled the card. I suspect they became concerned with credit card fraud as well.