We have a customer who is going through a divorce. The customer had an account with his life savings in it and he added his wife on the account when they got married 6 months ago. His wife left him and before she did she opened an account online on our website in just her name and transferred the funds from the joint account to the new one. The statements to the joint account just show that the account was closed and that the balance was transferred. The customer is requesting something from the bank showing that his soon to be ex-wife did the transfer. Is this something we can give him?

If you were on an account and there was a transfer out of the account that you did not recognize, would you ask for documentation? He did, and IMHO, the bank needs to defend itself that they acted within the withdrawal authorities of the account.

On the other hand, and to answer the question, the bank has an obligation to show him that his soon-to-be ex made the transfer.

As an aside, some banks I know have firm policies against allowing transfers between accounts that don't match ownership completely. Which is not to say she couldn't have moved the funds into her individual account another way.

The bank has said that we cannot give him this information without a subpoena due to the privacy policy. The customer has said that his attorney has informed him of his right to this information without a subpoena. The customer has also said that he will file an unauthorized transaction complaint along with filing complaints with the FDIC and Division of Banks. How should we handle this?

The bank has said that we cannot give him this information without a subpoena due to the privacy policy.

The person is on the account! What privacy violation - it was his account and his money?

I agree with Rocky - if it's a transfer/withdrawal out of a jointly held account and the customer is one of those named on the account, why wouldn't he be able to have access to the information for that account?

Obviously the same isn't true for the account it was put into since that one doesn't include his name, but it doesn't sound as though he's asked for any information regarding the new account. He simply wants to know if his soon-to-be-ex-wife is the one who initiated the transfer out of the account he is named on.

As for the unauthorized transaction...I would think if she was still named on the original account, it's within her rights to do what she'd like with that money as long as it falls within the bounds of the agreement the account was created under. He may not have authorized the transaction, but as long as the account agreement allows transactions to occur with the authorization of just one owner, then an unauthorized transfer complaint may not fly too far. I would think any rebuttal he has regarding that transaction is going to have to play out in the courts, not in your front lobby.

I actually agree with the customer that all he is looking for is documentation showing that his soon to be ex-wife was the one who made the transfer and it shouldn't need a subpoena to get that information. He has specifically said that he doesn't want to know anything about where the money went but just wants something showing that it was an authorized withdrawal. I feel bad for the customer because no one can give him a clear answer as to why they won't give him the information. I have actually escalated this to our CFO to have him look into it as I believe that the customer is being reasonable.

Boy - nothing like the bank digging themselves in a hole that does not exist. The guy is an accountholder and he has a question as to whether a transaction on the account was authorized and the bank refuses to provide that information. Geez - no wonder Warren and Waters get on the warpath against banks.

The CFO couldn't get the Risk Department to change their minds. No one has said what Regulation would be preventing them from giving this information and why they won't give him the details. The customer has said he will get the subpoena but the attorney has said that he didn't need it to obtain this information. All he's looking for is confirmation that his soon to be ex-wife as the joint owner authorized the transaction.

Kudos to you, Anon, for elevating it and trying to get them to see things the way they should. Randy's right about a bank digging itself into a hole that does not exist - as you said, they couldn't say what reg they thought would prevent them from giving the customer the info he asked for.

Document document document the info you've provided, and the guidance you've given to the decision makers. That way if (when) this blows up in the bank's face, you've covered yourself by showing that you attempted to steer them toward reason.

I'd be one ticked-off customer.

Sounds like a Regulation E violation also. Sounds like a claim of a potential unauthorized transfer.

Also, the "Risk" Department is properly named in this situation - other wise they should be named the "Anti-Risk" or "Risk Prevention" Department

Would there be a Reg E claim Randy? The way I read the original post, the ex-wife transferred the money before she left the customer, and therefore presumably while her name was still on the account. Provided the account agreement doesn't require both owners to authorize a transaction, would the customer be able to claim it was an unauthorized transfer if the ex-wife still had all the rights of a joint account owner?

It is a Friday afternoon...3:07 pm here to be exact, and I'm drinking coffee to get through the last 50 minutes of my day. Very possible I misread/misunderstood something in the post!

No - but he is questioning whether it was or was not an unauthorized transfer, as such the bank has a duty to investigate and provide the customer with the documentation that he is requesting. He is just asking for documentation that proves that the transaction was authorized - not where the money went.

1005.11(a) Definition of error. (1) Types of transfers or inquiries covered. The term “error” means:

(vii) The consumer's request for documentation required by § 1005.9 or § 1005.10(a) or for additional information or clarification concerning an electronic fund transfer, including a request the consumer makes to determine whether an error exists under paragraphs (a)(1)(i) through (vi) of this section.

Oh okay - turns out I was misreading what you were saying. He can file the claim, though the bank's investigation will show she was able to move the money.

Thank God it's a long weekend this weekend...

"He can file the claim,"

He already has.

Since the customer already has an attorney involved, the "Risk" Department is going to get the bank sued if the attorney has half a brain.

We won't even talk about the potential criminal liability.

15 U.S. Code § 1693n - Criminal liability

(a) Violations respecting giving of false or inaccurate information, failure to provide information, and failure to comply with provisions of this subchapter Whoever knowingly and willfully—

(1) gives false or inaccurate information or fails to provide information which he is required to disclose by this subchapter or any regulation issued thereunder; or

(2) otherwise fails to comply with any provision of this subchapter;

shall be fined not more than $5,000 or imprisoned not more than one year, or both.

I agree with Randy and others that this is not being handled well by the "risk" department. My thought in reading this was exactly what Randy said: that a Reg E "error" has already been filed by the customer and that the bank is refusing to investigate (and resolve promptly) the error.

Said another way from what Randy already said, keep in mind that 1005.11 cover a number of items, known as an "error," which is more than just an "unauthorized EFT" (which we often tend to get hung up on). I do agree that this situation is not an unauthorized EFT, but, again, 1005.11 relates to "errors" which cover more circumstances than just unauthorized EFTs.

In fact, an error under 1005.11 includes:
(i) An unauthorized electronic fund transfer;
(ii) An incorrect electronic fund transfer to or from the consumer's account;
(iii) The omission of an electronic fund transfer from a periodic statement;
(iv) A computational or bookkeeping error made by the financial institution relating to an electronic fund transfer;
(v) The consumer's receipt of an incorrect amount of money from an electronic terminal;
(vi) An electronic fund transfer not identified in accordance with § 1005.9 or § 1005.10(a); or
(vii) The consumer's request for documentation required by § 1005.9 or § 1005.10(a) or for additional information or clarification concerning an electronic fund transfer, including a request the consumer makes to determine whether an error exists under paragraphs (a)(1)(i) through (vi) of this section.

The bottom line is that since your customer requested "documentation...for..clarification concerning an electronic fund transfer," it appears you have an error subject to the error resolution timeframes of 1005.11 of Regulation E.

In addition to the liabilities Randy mentioned, you could be looking at UDAAP penalties as you (presumably) disclosed in your EFT disclosure that you would investigate "errors" in accordance to Regulation E, but you are requiring a subpoena to do so which is far above and beyond what you have disclosed (and what is permitted by law). There have been several UDAAP cases over the last few years relating to Regulation E and not investigating errors as was disclosed (see the USAA consent order and consent orders relating to requiring a police report).

The original post states what the BANK knows. What does the customer know? He's looking at his statement an all he can see is that the balance was transferred.

He may be assuming that his wife made the transfer to herself, but he cannot be certain by looking at his statement as the offset is not disclosed.

Is he claiming that the transfer was unauthorized? If so, he is entitled to know if his wife (who was authorized) made the transfer. He is also entitled to any documentation that you relied on, whatever that might be.

If you do not provide the customer with this information, you are violating Regulation E and subjecting the bank to possible penalties. This results in consumer harm which is frowned on by all regulators.

What is the logic behind your RM division's decision? Makes no sense to me.