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#1149662 - 03/23/09 04:17 PM Phishing Scam & Reg E????
diputs
Unregistered

Does Regulation E require the bank to give provisional and/or re-credit in this case?

Three customers and one suspect.
Customers A, B, & C and suspect D

Customer A & B get a Phishing email with a bogus website that asks them to confirm their account numbers, password, etc data. They, unfortunately, fell for the scam and $$ were transferred from their accounts to customer Cs account. Customer C had been duped by the Nigerian scammer and was told to set up an account at the bank and that the scammers client $$ would be deposited into Cs account. Of course, C was given instruction to wire the $$ to Scammer in Nigeria, which C did.

Now that all has been exposed, certain bank managers are trying to refuse re-crediting the A & Bs accounts because they gave out their information which enabled the scammer to get their $$. However, I understand Reg. E to say that we must give A & B their money back. (Reg. E Official Staff Interpretations 2(m)3 & 6(b)2)

C, on the other hand, I am assuming is liable

Is this correct?
Thank you

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eBanking / Technology
#1149693 - 03/23/09 04:35 PM Re: Phishing Scam & Reg E????
ktac MITCH Offline
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ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
Customers A&B may have been duped / negligent / stoopid / etc., BUT . . . there were transactions to their account that were not authorized therefore, they have a Valid Reg E claim = bank loses the money not them.
Customer C most likely took cash out and sent it by Western Union or something similar (not wired using the banking system) = The customer performed the transaction & they are liable even though they may have been duped / negligent / stoopid.
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#1149738 - 03/23/09 05:22 PM Re: Phishing Scam & Reg E???? ktac MITCH
diputs
Unregistered

Customer C did send it Western Union as you suspected.
So, A & B get thier $$ back from bank, but
C does not...Correct?

Now, can we make C pay the $$ back to the bank that A & B lost?

Thank you
ps,
Jokingly, I refer to these type transactions as the 4-1-9 EZ loan application, where your credit history has no bearing

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#1150093 - 03/24/09 01:29 AM Re: Phishing Scam & Reg E????
Andy_Z Offline
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Posts: 27,193
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A&B gave account info, but no authorization to debit funds. You didn't say how the transfer happened, so I assume their funds were stolen. They get ALL their money back.

C is a criminal. C may not know they were used in a criminal activity at the time, but C shouldn't be making a claim for anything but bail.

C has no claim because they authorized their transaction. C took your customers, A&B, monies. And yes, I'd be demanding from C. If C has other money in your bank, think setoff as you call counsel. The only way I wouldn't be looking for setoff or garnishment, would be if the DA said they want the higher amount in their court filings.
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#1151303 - 03/25/09 06:58 PM Re: Phishing Scam & Reg E???? Andy_Z
diputs
Unregistered

Andy,
A & B's $$ were transfered by suspect D.

D had C give him the internet passwords, etc... to C's account.
D then set up A & B's accounts to tie to C. After that setup, the internet banking system allowed for internal transfers because all accounts were tied together.
D did all of this without C knowing (so claims C)
D then told C that he needed C to send $$ via wire (WU) for his business, etc... Lie Lie Lie...

C claims no knowledge of the criminal intentions of D until in all came crashing down.

This (to me) looks like an advanced fee scheme. Instead of sending a money order or certified check (fake) to the victim the activity was perpetrated via this internet banking scheme.

Does this look like an "advance fee" to you?

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#1151326 - 03/25/09 07:16 PM Re: Phishing Scam & Reg E????
ktac MITCH Offline
Diamond Poster
ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
Originally Posted By: diputs
Andy,
A & B's $$ were transfered by suspect D.

D had C give him the internet passwords, etc... to C's account.
D then set up A & B's accounts to tie to C. After that setup, the internet banking system allowed for internal transfers because all accounts were tied together. . .


The criminal D had internet banking logon info for A & B & C and made the transfers using the internet - Correct ?
BUT - - are there not controls in place in your online banking that will not allow accounts to be tied together ???? Unless the person logged on is an account owner. (If my SS# is not on acct 1234567 there is no way for me to tie it to my internet banking)

Could C have a valid argument that weaknesses in your internet banking system is what allowed this fraud to occur & therefore the bank is liable ?????
_________________________
My opinions are just that, and might be worth what you paid for them.

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#1152295 - 03/26/09 07:55 PM Re: Phishing Scam & Reg E???? ktac MITCH
Andy_Z Offline
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I'm getting confused. I too share concern over how D was able to ties these accounts together.

Still, I come down to a Reg E issue, C voluntarily transferred money to D. The bank has no Reg E responsibility for executing a request by the true customer. C gets nada in my book.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#1162539 - 04/13/09 07:31 PM Re: Phishing Scam & Reg E???? Andy_Z
LegalBarn Offline
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Joined: Jun 2006
Posts: 5
A&B gave D their account info via the phishing scam, so D was able to access A&B's accounts online and link them to C's for the purpose of transferring money that C thought was from the "Client."

Apparently C doesn't watch TV or read a newspaper...(neither do A or B)...a complaint we have about many of the people who file claims with us on this kind of scam.
Last edited by LegalBarn; 04/13/09 07:32 PM.
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#1172784 - 04/29/09 08:38 PM Re: Phishing Scam & Reg E???? LegalBarn
luvflipflops Offline
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Joined: Nov 2005
Posts: 150
on a beach somewhere
We had the exact situation happen at our bank. The accounts didn't "tie" together, but D informed C that he would be receiving funds from two different accounts. D had access to both A & B and txfd the funds to C. C was instructed to send the money via WU. A & B were fully reimbursed, but C was left holding the bag. So we overdrew his account and he is in the process of repaying us, via our collections dept.

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