Customer's POA was in our office today, concerned about money missing from his mother's CD. Upon review, funds had been transferred multiple times via phone, all going into daughter's checking account (daughter has no ties to Mom's account). POA says he thinks his sister is stealing from Mom, as she's done it before. Mom is bedridden, and he highly doubts she's called in any of those times. Daughter would have access to Mom's personal information, and may be able to answer most security questions.

Assuming it does turn out to be fraud, where would our liability fall for processing those requests? If we had a good faith belief it was Mom, but don't record calls nor can we prove any of it, does that matter? We're talking $15k in the last 8 months, not to mention early withdrawal penalties, and lost interest Mom (or POA son) is out.

IMHO, mom (or possibly POA) documents that the transfers were not authorized, bank will repay and daughter goes to jail for fraud.

Review Regulation E's Comment 3(c)(6)-1, which discusses whether or not a telephone transfer agreement has been entered into, to help you decide whether the transfers were covered by Regulation E. Ironically here, the bank is better protected if the transfer ARE covered, because the bank can use 1005.6 to limit its liability to the consumer. Without that protection, the consumer has a pretty strong case to reclaim all her funds -- unless there is a limiting provision in the account agreement calling for prompt attention to periodic statements.

Whether or not Reg E is implicated, you can inform your customer (and/or her attorney-in-fact son) that the bank will have the right to pursue Daughter in the courts. See what happens to the claim once that nugget of information is shared.

Once you've refunded whatever funds you feel you have to, don't hesitate to take legal action against the crook in this case. People who abuse their elderly parents financially shouldn't get away with it. -- And don't forget to share what's happened with your BSA officer. The bank has a duty to file a SAR on this activity.

Finally, shut down any telephone transfer access going forward on the account.

Thank you both. I've got BSA as a hat as well, so am all over that angle. Ironically, daughter (who is in her 60s herself) is employed with a local "aging services" group, and I'm a bit concerned that if she's fleecing her own mother, she's willing to rip off anyone she can.

POA is reviewing statements, and intends to have a discussion with his sister, then let us know what's going on. I'm fully prepared to pursue her legally if it comes to it, and we have all the info we need to do so.

From our account agreement, after reviewing the commentary. Not sure it would stand up in court, but at least we have something to fall back on.
"If the transaction request is made by remote means such as telephone, we are not responsible for any request or order that we believe to be genuine; we can also refuse to honor such request or order if we in good faith do not believe it to be genuine or have reason to doubt the identity or authentication of the requestor."

If the transfers are covered by Reg E, that clause would not help you. The commentary to 1005.6 states, "Limits on liability. The extent of the consumer's liability is determined solely by the consumer's promptness in reporting the loss or theft of an access device. Similarly, no agreement between the consumer and an institution may impose greater liability on the consumer for an unauthorized transfer than the limits provided in Regulation E."

Since the withdrawals are from a time deposit, I don't think we can assume that the bank was sending periodic statements.

I agree that you'll want to shut down telephone transfer access on this account, but I also suggest taking it a step further. A telephone transfer request from any CD should be subject to additional scrutiny. Especially a transfer that takes place outside of the penalty-free grace period. And most especially a transfer to a third party. These are the types of requests that a call center simply should not accommodate.

Is the aging services group that employs your subject the same agency that would have jurisdiction to receive a report of abuse against the mother? If so, report this matter as high up the chain in the agency as you can possibly get. If you would report a crime against the mother to a different agency, let that agency know about the daughter's employer as well.

Don't forget any state law reporting requirements that you may have with respect to elder financial exploitation!