Very upset with PenFed

[Rustward]

Quote:

Originally Posted by Surfdaddy You indicated that they can't do customer phone calls with their "high" volume of business. I was just pointing out that a MUCH higher volume of operation business (even though different) has no trouble making phone calls to its customers.

I fully understand what you are saying. . . and credit unions are mostly member owned and run on much smaller margins than big banks. That is how they are able to offer "better deals" than big banks. Been a credit union member for about 27 years (can't remember when I joined), and occasionally I think of them as "cheap" but then I realize that that "cheapness" gets returned to me in the form of higher interest rates on deposits, lower rates on loans, and lower fees.

It is unfortunate this happened to you. I don't think you need to worry about getting your money back -- you should get it all back except for possibly some fees, and you are in a good position to ask for any fees to be reversed. I wish you good luck.

[Dave J]

Surfdaddy,

This is a real bummer for you. I can't imagine they will not help you recover your money.

Did you not notice that you did not receive a 1099INT when you did your taxes each year?

I've been with PenFed for about 9 years and no problems so far, but your problem is wild.

[Stevewc]

I know this thread is about the bum deal the OP is dealing with but here's a positive article I just read.
Just to put a little different slant on the conversation.
Or the other side of the coin.
Of course most all you folks know this already.

The Last Great CD Rate - CBS MoneyWatch.com

Steve

[Nords]

Quote:

What if there was a U.S. government bond yielding 3.49%, and had a put option that gave you the right to sell it at $96.51 per $100 if the bond bubble bursts? Well, there is with the Pentagon Federal Credit Union seven year CD, yielding 3.49 percent APY. The risk of a bond bubble Interest rates are at a historic low. The current seven year treasury is paying 1.90 percent annually, according to the US Treasury. And with a seven year maturity, this bond’s small payment translates to a 6.6 year duration, which is a geometric average of when you get your money back.

Holy cow, Roth, it's a freakin' seven-year CD. Who gives a flying hoot whether it's the equivalent of a put or a 6.6-year geometric-average duration Treasury?

Reminds me of trying to interpret read one of Bill Gross' columns...

[jazz4cash]

I guess the Moneywatch artical is a good reminder of why it's sometimes worth the hassle of poor customer service to get access to superior products. The true measure to me is how the institution responds. I expect Penfed to step up and make things right. If they do, I will be much less disappointed at the whole incident.

I kinda enjoyed the over-analysis / CD vs. Bond comparison. I get raised eybrows from folks when I confess to buying CD's.........but If I told them I bought a 7 yr bond with an attractive put option they would be impressed!

[haha]

Quote:

Originally Posted by Surfdaddy Well it sure is funny the Citibank, who is MUCH bigger than PenFed, can manage to call me at home whenever they see a charge they don't like on my CC.

Because they may get stuck with it.

[veremchuka]

what a mess and if i were the op i'd be worried about va having my money too! i hope you get it squared away, $60k is a lot of money to have floating around "somewhere"!

i have considered a penfed cd down the line some time but now that's not even a possibility when reading this thread. penfed should see this and realize their screw up can turn off thousands of potential or current customers.

[Surfdaddy]

Quote:

Originally Posted by Dave J Surfdaddy, This is a real bummer for you. I can't imagine they will not help you recover your money. Did you not notice that you did not receive a 1099INT when you did your taxes each year? I've been with PenFed for about 9 years and no problems so far, but your problem is wild.

So I have an update.
I received an email late today in response to my email to the Chairman of the Board.
They indicated that they had made an error, they apologized and said my accounts should not have been escheated (I now know what that word means!). They indicated that even with a dormant share account, there should not have been an escheat because I had a certificate with them. They indicated that the funds had not yet been sent to the state government, so they re-opened my accounts and put the money back in!

So of course I immediately went online. They had already fixed my address based upon my email to them.

It appears from the statements online that I have retrieved at this point (I never used to get them as they were always available online. No more - I will always download and save them.), they had my correct name, address, phone number, and email address. My zip code was also correct, but the city was an adjacent city. So they must have been receiving USPS notifications of a bad mail address. I don't know how they would have had my correct zip but a wrong city name. There was also nothing in the monthly statements to indicate that the share account was dormant. In their email they did indicate that they would work on the idea of an email notification to users.

IMHO they could have done a lot more to prevent this. The ONLY error was the name of the city. All other information was correct, including the zip code. My error was not being diligent enough (lessons for everybody for all of their financial institutions). You are also correct, I did not receive the 1099-INT and me not noticing this was my mistake. I have a lot of mutual funds, bank accounts, and investment accounts and I never really connected that I had not received any 1099s from PenFed.

The only remaining error is that they show interest posting in my CD on 10/16, and on the same day they closed the account for unclaimed funds. When they reopened the account today, the balance does not include the 10/16 dividend. So that is a relatively minor remaining issue and I will speak with them on Monday.

I do appreciate that they quickly responded and that I don't have to go through an unclaimed property situation. I have learned something here, and I hope they can clean up their processes a bit.

[VaCollector]

Quote:

Originally Posted by Surfdaddy So I have an update. I received an email late today in response to my email to the Chairman of the Board. They indicated that they had made an error, they apologized and said my accounts should not have been escheated .....

Best part of this whole discussion....nice to hear someone step up to the plate and say "sorry" or "whoops" or SOMETHING instead of quoting rules and regulations!

I for one appreciate the reminder to be diligent regarding my accounts!

Thanks for the post and very happy to hear that things are working out!!

[Spanky]

Surfdaddy,
Thanks for sharing your story, which could be a wake-up call for all of us about tracking our accounts. Speaking of dormant accounts, we did receive an email and letter from Etrade advising that we make some transactions or face the risk of losing the money to the state.

[NW-Bound]

Quote:

Originally Posted by Surfdaddy They indicated that the funds had not yet been sent to the state government, so they re-opened my accounts and put the money back in! ... I did not receive the 1099-INT and me not noticing this was my mistake. I have a lot of mutual funds, bank accounts, and investment accounts and I never really connected that I had not received any 1099s from PenFed.

All right! We all like a good ending.

About the missing 1099-INT, does that mean you did not put that on your past tax returns? No worry though. It is most likely the IRS already knows about it, and will be contacting you soon to ask for the missing tax, plus the interest on it. It may take them 2 or 3 years, but they will get to it. Don't ask me how I know.

Yes, I also have many accounts, and one 1099 form got lost in the mail one year.

[Dave J]

Quote:

Originally Posted by Surfdaddy So I have an update. I received an email late today in response to my email to the Chairman of the Board. They indicated that they had made an error, they apologized and said my accounts should not have been escheated (I now know what that word means!).

That is great. In my 25 years of long distance banking/investing, I have had a couple instances similar(not my mistake)(not PenFed) and they have always been taken care of at no cost/loss to me.

One took 4 months, when my savings and loan sent my entire IRA(20k), instead of the 5k I ordered to 20th Century Investments, who invested the entire amount in the fund I had chose , and this happened 2 or 3 days before the crash of 1987. My 20k became 15k overnight. Those were the days before the Internet, and I did not find out about the mistake for a week or so.

This was my first try at mutual funds. Imagine my shock. After both sides, pointed fingers at each other, blaming each other and lawyers copying me their letters, 4 months later I was made 100% whole.I "think" the saving and loan ate the loss because they sent more than the paperwork showed, but I'm not sure.I was made whole,so I was happy.

At the time, that 20k was probably 75% of my small net worth, excluding my home.

[Curly]

Quote:

Originally Posted by Surfdaddy So I have an update. ... They indicated that the funds had not yet been sent to the state government, so they re-opened my accounts and put the money back in! .

Mr. Surfdaddy: I want to thank you for telling your story and following up with PenFed's response. I think we (particularly me) have learned a lesson from your experience and appreciate the time you have taken to share it with us.

Aside from the niggling lingering issues of restating the accumulated interest you are due and the potential to incur an IRS late tax payment penalty, it looks like this situation has worked out fairly well (notwithstanding your lost sleep and stress).

However, I'm curious about PenFed's treatment of your funds during a time when they thought you had an inactive account. What credit union bucket did they put the money in if it wasn't in your account and it wasn't sent to the State? Can we infer from PenFed's statement that they have a inactive/dormant holding account that is a bucket of "found money" that they keep and perhaps never send it to anyone. In my increasingly skeptical view of banking procedures I can envision that an institution could declare an account inactive and simply keep the money - resulting in a new found source of bank income. I am still keenly interested in seeing PenFed's written policies associated with inactive and/or dormant accounts.

[calmloki]

Surfdaddy - ah. all's well that ends well. Good to hear Penfed got on the stick and made things right. Our most recent financial flub involved getting reimbursed for education expenses by the Oregon 529 plan. They sent the entire amount in the 529 plan for the wrong kid to our bank rather than the $500 they should have sent from the right kid's account. Sigh. it got returned and put back in the plan, but we will have an extra tax form this year to explain why we shouldn't pay tax on the earnings from that apparent sale and reinvestment. Nowhere near the numbers you were dealing with though!

Mistakes happen - it's how they get fixed that counts.

[jazz4cash]

Thanks for sharing your experience and the followup. I am VERY relieved with the response from Penfed, although I am sure some would feel they could/should do more.

I think we all got a wake up call to double check our contact info. I had a problem once where I had filed a change of address at my credit union, but somehow it only applied to my deposit account and not my credit card, so I think sometimes these problems are inevitable and email vs. snail mail is not a fix all.

I feel that USPS has some responsibility as well, and I would make contact with the local postmaster as well. Since the zip code was correct, I think the mail was deliverable. Might consider filing a COA for the incorrect address.

As for the 1099INT discussion, I recall PenFed sends a combined 1099INT/DIV where they list the various accounts line by line, so it wouldn't be so hard to overlook this.

[Dawg52]

Quote:

Originally Posted by jazz4cash Thanks for sharing your experience and the followup. I am VERY relieved with the response from Penfed, although I am sure some would feel they could/should do more. I think we all got a wake up call to double check our contact info.

Same here. Glad things have worked our OK for you. And I double checked my info on all accounts, not just PF.

[Surfdaddy]

Quote:

Originally Posted by NW-Bound All right! We all like a good ending. About the missing 1099-INT, does that mean you did not put that on your past tax returns? No worry though. It is most likely the IRS already knows about it, and will be contacting you soon to ask for the missing tax, plus the interest on it. It may take them 2 or 3 years, but they will get to it. Don't ask me how I know. Yes, I also have many accounts, and one 1099 form got lost in the mail one year.

Well, uuuhm....

So I am still out the $140 or so for a missing month's interest, and then I will end up paying back taxes and a penalty. I assume the interest will be straightened out.

It is still annoying that this was their mistake and I am going to be penalized (re: the IRS) for it. But I guess I should have noticed that the statement was missing for the 1099.

[Bestwifeever]

So glad it was resolved so quickly, SD. What relief you must be feeling!

[Dave J]

Quote:

Originally Posted by Surfdaddy Well, uuuhm.... So I am still out the $140 or so for a missing month's interest, and then I will end up paying back taxes and a penalty. I assume the interest will be straightened out. It is still annoying that this was their mistake and I am going to be penalized (re: the IRS) for it. But I guess I should have noticed that the statement was missing for the 1099.

You would not be able to complain about the taxes,( you would owe them anyway) but you might ask them real nice to cover the penaltys and interest for you. It might happen.
I doubt they would be a large amount.

[NW-Bound]

Well, I dunno. It is the responsibility of the account holder to know that taxes are due. I don't know about PenFed, but nowadays, the 1099 form is usually available on the Web of most or all financial institutions for downloading, in case you lose the snail-mail copy.

In my case, I redeemed an I-bond one year, and as taxes on I-bond interests are deferred, the I-bond account is not something I usually have to worry about taxes at year ends.

I don't know if the Treasury did not send one to me, or if USPS lost it, or if I tossed it out with the junk mail. So, I completely forgot about that until I received the letter from the IRS 3 years later saying I owed them money. So, I sent that in, and that was it. As I recall, there was no penalty and only the interest on that tax amount for 3 years. As I held that I-bond for quite a few years, there was quite a bit of deferred interest income that was taxable, and I had to write a check for a couple of grands.