Thought some of you might be interested in this article.

DOJ Probe

Although it was understandably discussed far less than the $15 million penalty that buried the Bank of Delaware, DOJ took a $500,000 bite out of the corpse to establish a fund to reimburse consumers. They cited FIRREA as their authority.

I think it is about time. You would think that any bank that processes ACH transactions that allow these scammers to use the bank and continue to allow them to process, even when the return rates begin to rise due to claims of unauthorized transactions, should have some accountability if they turn a blind eye.

Retread unearthed this case a couple years ago. There, DOJ's representative indicated the Bank Secrecy Act imposed on banks a responsibility to protect consumers.

It worries me that they are getting smarter... Citing BSA for this purpose made them look ridiculous. If they are trying to rationalize gutting the bank FIRREA is a better fit.

I always read these things like an indictment, knowing they are not even handed in their presentations, but some of them are simply compelling.

You know, there had to be people in these banks who knew it wasn't right, but could not make their voices heard. It's a tough spot to be in, but anyone in this line of work who realizes no one is listening should move on.

Ken - your first post came in while I was composing mine, but when I looked at the article you posted I noted:

"The government alleges that the bank knew – or turned a blind eye to the fact"

Maybe I should go to work for the DOJ

Interesting comment: "Banks should know their customers, and their customers' customers, in order to ensure that payment processors are not working on behalf of scam artists, he said."

The payday loan issue puzzles me. A bank doesn't necessarily know the terms of the underlying transaction related to debits, so I think it is a stretch to expect banks to prevent these. But for the request to stop the debits, what gives the bank the right to ignore the customer's request?

There was an article about this on the front page of the Sunday New York times a couple weeks ago. It was a blend of half facts and total ignorance. The article said banks refused to let their customers close the accounts so the debits from the payday lenders just kept on coming.

What I think they were clearly leaving out was the fact that the accounts were already overdrawn and the bank was insisting that the balance be brought back to the black as a condition of closing the account. There have been other articles since, including this one.

Maybe the DOJ people are subscribers too?

Now that you mention it, remember reading that. Still seems shortsighted and vindictive (on the bank's part.)

Can understand the government wanting help in finding criminals. I'm not in banking any longer, but reading all the threads her, seems like banks are be becoming an arm of the government. Why should banks be responsible for making sure people don't make stupid decisions? Can get the money laundering thing. Fine. But because someone takes out a payday loan, the bank that accepts the deposits is at fault?

But because someone takes out a payday loan, the bank that accepts the deposits is at fault?

No. But I believe that the bank has the duty, whether right or wrong, to know their customers. Typically, these types of cases are more of the egregious variety. Anybody that has been in banking for a number of years knows fully well that sometimes profit overrides common sense. That can be witnessed time and time again based on some of these cases. I discount most anything that I read in the press regarding these issues. However, for the DOJ to get involved and settle with a bank, it is not the run of the mill type of situation.