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Mind Your Money Against Bank Account Compromises




A man opening his empty wallet.
Whether you see unauthorized use of your credit card, debit card or otherwise see that your bank account is compromised, here's a helpful guide on what to do.



Have you spotted unauthorized use of your debit card? Is your online bank account compromised?


Take a deep breath. Here's what you need to know and what you should do in case either situation happens.




Bank Account Compromises: First Things First

If you see unauthorized card use, or see that your account is compromised, you need to contact your bank as soon as possible. That way, they can take action to prevent and reduce any fraudulent transactions.


Your bank may open a new account for you and transfer both your funds and bill pay information. Do keep in mind if this happens, that you will need to verify and then notify any direct depositors of the change.


Banks and Credit Unions adhere to the FFIEC Electronic Fund Transfers (Regulation E). Regulation E protects consumers when they use electronic fund transfers -- things such as debit cards, online shopping, online bill pay, and wire transfers are all covered.


Regulation E also allows you to dispute under these kinds of circumstances:

  • Unauthorized electronic funds transfers (EFTs)

  • Incorrect EFTs to (or from) your accounts

  • Omission on an EFT from your bank statement

  • Computational or bookkeeping errors made by your bank regarding an EFT

  • Receipt of an incorrect amount of money from an ATM or other electronic terminal

  • Errors involving pre-authorized transfers

  • Requests for additional information or clarification concerning an EFT


If you need to dispute a transaction, there are responsibilities you own. The good news is that Regulation E limits your liability if your debit card is lost or stolen, and the sooner you report a lost or stolen card, the lower your maximum liability is if unauthorized charges are made.


To put it another way, the longer you wait to report a lost or stolen card, the higher your personal liability is.




Offer in Compromise Mill Scam

The IRS is strongly warning taxpayers about Offer in Compromise (OIC) mills that try to mislead people into believing their tax debt can be settled for pennies on the dollar.


There’s been constant, heavily advertised promises from these OIC mills, offering to settle taxpayer debt at steep discounts. But in many situations, taxpayers that apply for these services don’t meet the technical requirements for an offer. The OIC promoters, knowing this, charge excessive fees to their customers and supply them with information that could be easily obtained.


“This is a legitimate IRS program,” Werfel said. “But there are specific requirements for people to qualify.” Werfel recommends that taxpayers review easily available IRS resources to help resolve their tax debt first, before approaching one of these aggressive promoters.


OIC mills often just get the same offer that you would’ve received, had you worked directly with the IRS yourself.




Timely Notice Given

If you notify your financial institution within two business days after learning your card was lost or stolen, your liability is either how much was spent or $50, whichever is less.




Timely Notice Not Given

Failing to notify your financial institution within those first two business days bumps your liability up to either $500, the amount of unauthorized transfers that occurred within the two business days, or those transfers plus any other unauthorized transfers that wouldn't have otherwise occurred had your financial institution been notified.




Periodic Statement: Timely Notice Not Given

If you spot an authorized EFT on a periodic statement, you must report it within 60 days of the financial institution's delivery of the statement to avoid liability for any subsequent transfers.


If you fail to do so, the parameters of your liability are similar to those when timely notice is not given: your liability will be no more than any additional transfers that have been made after that 60 day window was up, and that your financial institution also establishes that those transfers wouldn't have been made had they been notified within those 60 days.




Extension of Time Limits

If you have extenuating circumstances and you're unable to report any suspicious activity to your financial institution within any of the time windows previously mentioned, your financial institution has the power to extend those times to more reasonable periods.




Notice to Financial Institution

A notice to a financial institution is when you take the steps reasonably necessary to provide your financial institution with pertinent information. In this case, it doesn't matter whether or not a particular employee or agent of the institution actually receives the information, just as long as you sent it.


You can notify your institution either in-person, by phone call, or by writing. Written notice is considered "given" at the time you mail the notice, otherwise your notice is considered given at the time of your transmission of it to your institution. Notice is considered "constructively given" when the institution is aware of circumstances leading to the reasonable belief that an unauthorized transfer to or from your account has been made.




Scams

Like always, there's bad actors looking to capitalize on people to try and make them think they're a victim of unauthorized transfers. But fortunately, there's a few key ways to sniff out impersonators.


If someone's contacted you to inform you your account was compromised and simply provided a number to call, don't call it. Call your bank directly through the number found on your statements or on their website (And a fun fact: you can find your bank's phone number on the back of your card).


If you spot very low transactions (think low, low amounts like $0.01), this potentially means that a scammer has your information, and is testing it before using your account for fraudulent transactions. It could also mean they're attempting to sell your information as verified. In either case, if you see transactions you know you haven't made, contact your bank.


Those simple penny transactions can quickly snowball into serious amounts of money.




Final Thoughts

This overview is meant as a helpful guide, but like always, you should contact your bank directly if you have any specific questions.





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