Fraudulent ACH transaction

[Ready]

I have a CD and savings account with Freedom Credit Union based in Pennsylvania. They had a good promotional CD rate a few years ago so I opened a CD to take advantage of it.

Last week I noticed an ACH transaction for a payment to a gas company based in PA. I live in CA and have never lived in PA or even traveled there in the past 20 years. I have no idea how they got my account number. I called the credit union to report it and they told me I would have to contact the utility company to resolve the issue. I can just imagine trying to contact a utility company that I have no relationship with and asking them to chase an ACH transaction through their system.

It got me wondering, do any banks offer a way to review and approve an ACH transaction before it gets processed? It seems crazy that some company I have no relationship with can just send a request to take money out of my account and the bank just processes it without any procedure to validate the transaction.

Also, should I be insisting they change my account number to prevent this company from issuing another ACH transaction against my account?

[Car-Guy]

They won't fix this or even help you? I think I'd be switching financial institutions.

[steelyman]

Do you write paper checks? They have all the information necessary for an ACH transaction printed across the bottom.

[ADDED] If you do, reviewing to whom checks were written might help chase this down.

[MichaelB]

Quote:

Originally Posted by Ready I have a CD and savings account with Freedom Credit Union based in Pennsylvania. They had a good promotional CD rate a few years ago so I opened a CD to take advantage of it. Last week I noticed an ACH transaction for a payment to a gas company based in PA. I live in CA and have never lived in PA or even traveled there in the past 20 years. I have no idea how they got my account number. I called the credit union to report it and they told me I would have to contact the utility company to resolve the issue. I can just imagine trying to contact a utility company that I have no relationship with and asking them to chase an ACH transaction through their system. It got me wondering, do any banks offer a way to review and approve an ACH transaction before it gets processed? It seems crazy that some company I have no relationship with can just send a request to take money out of my account and the bank just processes it without any procedure to validate the transaction. Also, should I be insisting they change my account number to prevent this company from issuing another ACH transaction against my account?

The Electronic Funds Transfer Act protects you against unauthorized electronic transactions, but you do need to comply with the regulations, and it is not your responsibility to deal with the payee. It is not uncommon for banks to push back. I’ve had multiple encounters with banks for unauthorized transactions in our accounts and those of family members and the banks have always initially pushed back, without exception. They have also announced “procedures” that differ and do not comply with federal regulations regarding fraud.

You should report the unauthorized transaction in writing to your bank‘s fraud reporting dept or function. At his must be done within a 60 day window, and you may need proof of the filing. If you don’t receive written acknowledge from the bank, file a complaint to the federal regulator and state attorney general. A police report for theft may also help.

You have no reason to assume this is an error. Regardless of intent, it is an unauthorized transaction. It may be a customer of the utility that deliberately and fraudulently set up the transfer.

It is completely bogus for your bank to tell you to deal with the utility. If this were a legitimate error by the utility, they would still have a hard time finding the transaction without knowing which utility customer account is involved and you do not have that info.

[Aerides]

Quote:

Originally Posted by Ready It got me wondering, do any banks offer a way to review and approve an ACH transaction before it gets processed? It seems crazy that some company I have no relationship with can just send a request to take money out of my account and the bank just processes it without any procedure to validate the transaction. Also, should I be insisting they change my account number to prevent this company from issuing another ACH transaction against my account?

Yes as MichaelB indicates, press this matter as fraud via your bank/CU.

It could be an error, a literal typo. ACH only requires your ABA/DDA numbers shared on the bottom of your checks (and the ABA number is the bank's own number, only the DDA, the 2nd number is your personal account). ACH is a clearing house, by definition, for intra bank transfer and I am not aware that there is anyway to block/approve these transactions, no more than you can block approval of checks getting paid.

In your shoes I might move the money to another account and then watch for a while. Or, yes, insist on a new account number.

[rothlev]

Quote:

Originally Posted by Aerides Yes as MichaelB indicates, press this matter as fraud via your bank/CU. It could be an error, a literal typo. ACH only requires your ABA/DDA numbers shared on the bottom of your checks (and the ABA number is the bank's own number, only the DDA, the 2nd number is your personal account). ACH is a clearing house, by definition, for intra bank transfer and I am not aware that there is anyway to block/approve these transactions, no more than you can block approval of checks getting paid. In your shoes I might move the money to another account and then watch for a while. Or, yes, insist on a new account number.

and they should reimburse you the funds. Insist on it. They have to open the fraud investigation.

[Walt34]

Retired fraud investigator here. What MichaelB told you is correct. WRITE to the bank, a telephone call does not preserve your rights. Send the mail return receipt requested, a PITA I know, but that is your proof of your writing the letter. When you do write, assume the reader of your letter(s) has no knowledge of anything that was written or said before. (They really may not have.) And of course keep a copy of EVERYTHING sent or received, including the envelopes in the case of mail you receive. In government and in finances, "if it isn't in writing, it didn't happen".

Also, the 60-day clock started ticking when you learned of the fraudulent transaction so don't sit on this. You don't have to send it overnight mail, but don't stall either.

[Ready]

Thanks for the suggestions everyone. I sent them a letter via their secure message center. It looks like a copy gets stored permanently on my account so I think this should serve as proper notice. I also requested they change my account number.

I am surprised that no banks have implemented a procedure to allow an ACH to be approved prior to it being processed. It seems like it would be a simple thing to implement.

[CardsFan]

Quote:

Originally Posted by Ready Thanks for the suggestions everyone. I sent them a letter via their secure message center. It looks like a copy gets stored permanently on my account so I think this should serve as proper notice. I also requested they change my account number. I am surprised that no banks have implemented a procedure to allow an ACH to be approved prior to it being processed. It seems like it would be a simple thing to implement.

That will probably work, but I would still send a hard copy. Old school, I know.

[Sunset]

Quote:

Originally Posted by Ready Thanks for the suggestions everyone. I sent them a letter via their secure message center. It looks like a copy gets stored permanently on my account so I think this should serve as proper notice. I also requested they change my account number. I am surprised that no banks have implemented a procedure to allow an ACH to be approved prior to it being processed. It seems like it would be a simple thing to implement.

At least take a snapshot or screen grab of the message in the secure message center.
It only has to disappear for ALL your proof you notified them to be gone.

So many times a screen grab has settled a disagreement between me and various entities, I now take one even when just paying my bill.
Later I can delete old ones so there is zero cost.

[iloveyoga]

This happened to my sister with her bank (via her debit card) and I was very frustrated and surprised at the bank's response. Her money to pay bills was literally gone and she had to work with the fraud people and then wait to get her money back. She eventually did but it was a painful process.

She quit using her bank debit card on-line and only uses a real credit card now.

[JoeWras]

Quote:

Originally Posted by iloveyoga This happened to my sister with her bank (via her debit card) and I was very frustrated and surprised at the bank's response. Her money to pay bills was literally gone and she had to work with the fraud people and then wait to get her money back. She eventually did but it was a painful process. She quit using her bank debit card on-line and only uses a real credit card now.

This is why DW and I have zero debit cards to our name. DW worked in the banking industry and swore them off after seeing how the sausage is made.

[sengsational]

I agree with Walt and that's what I would do: signature on delivery of letter. As to the content of the letter, it would have a date, maybe 10 days from the mailing date that said you'd be getting the state AG involved if not resolved. And be specific about who and how you will expand the scope (the AG name, address, and specific 'lingo' that matches the action you are threatening). You want them to put your problem on the "would be a PITA if he gets them involved" stack.

[Ready]

I logged in to my account this morning and I see they have reversed the charge with the description “Deposit Provisional Credit for Disputed ACH Transaction” so I’m assuming they read my letter. They did not respond though, so I replied acknowledging the provisional credit and restating my request for them to change my account number so that the merchant does not attempt to do another ACH against my account.

The merchant is a utility (gas) company in PA so I don’t think there was intentional fraud here. I’m guessing some numbers got transposed and somehow my account number ended up in their system.

[smihaila]

Please don't count on the provisional credit on the account alone. It can be like with credit card transaction disputing process - i.e. may get reversed.


A registered written letter is still advisable in this situation.

[Ready]

Quote:

Originally Posted by smihaila Please don't count on the provisional credit on the account alone. It can be like with credit card transaction disputing process - i.e. may get reversed. A registered written letter is still advisable in this situation.

I sent a letter using their secure email system which is documented on my account so I'm comfortable with that for now. My CD matures in February at which point I will be closing my account, so that will prevent any further fraudulent transactions from being processed. It will be interesting to see how they handle my closing the account if the disputed charge is still considered "provisional".

[pb4uski]

Was the erroneous debit to your CD or to your savings account?

[smihaila]

Quote:

Originally Posted by Ready I sent a letter using their secure email system which is documented on my account so I'm comfortable with that for now. My CD matures in February at which point I will be closing my account, so that will prevent any further fraudulent transactions from being processed. It will be interesting to see how they handle my closing the account if the disputed charge is still considered "provisional".

If your plan is to close the account by Feb next year, then yes, you have more peace of mind and you wouldn't need to do more, I agree.

[Ready]

Quote:

Originally Posted by pb4uski Was the erroneous debit to your CD or to your savings account?

It was the savings account. I’m required to maintain a savings account while I have a CD there but as soon as the CD matures I plan on closing both accounts. The savings accounts has less than $50 in it so the exposure is not significant.

[pb4uski]

For my CU CDs I only have the required minimum of $5 in share savings... I would think that would eliminate or minimize the problem.