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Of all the worries that parents of young children face, few would rank the prospect of their 7-year-old opening up six credit cards and running up $35,000 in debt as one of the most pressing. But increasingly, parents and young adults are struggling with a very similar reality these days — only the children themselves aren't to blame, identity thieves are.
Last week, two stories of childhood identity theft hit the headlines...
- In Florida, a woman was accused of opening up a Capital One credit card under her daughter's name, and then using the card until the girl's father began to notice collection notices being sent to their home.
- In California, a man was discovered to be using the identity of a 4-year old who died in 1984. He was caught after using the deceased child's name to buy a home, a car, and to obtain several credit cards.
A Growing Problem
According to the Federal Trade Commission, there were more than 34,000 incidents of childhood identity theft reported between 2005 and 2007. The figure makes up about 5 percent of all identity thefts.
Chiefly to blame is a credit check system that at no time makes an effort to verify the age of individuals. With nothing but a Social Security number, thieves are often able to gain a credit history by finding creditors who don't require a photo ID or birth certificate. The first age that goes into a system like Trans Union, Experian, or Equifax, becomes permanently associated with the applicant's name and Social Security number.
Here's how John Moira, the father of the girl who had her identity stolen by her mother, describes it:
"My heart dropped, I couldn't believe it," said John Moisa, who became suspicious when he received correspondence from the credit card company addressed to his daughter. "At first I didn't think about it until my mom said she was getting collection calls at her house."
Moisa called the credit card company, which wouldn't initially talk to him until he faxed proof of his daughter's age. Moisa said he's spent the past several months trying to repair the girl's credit.
"It was unpaid, past-due bills, so it didn't look good," Moisa said.
Parents Are the Best Protectors (and Most Likely Culprits)
Some experts estimate that around half of childhood identity theft is committed by parents and relatives with access to a full range of information and documentation associated with a child. Other reports point to teachers, administrators, coaches, babysitters, and others with easy access to documents and records. (Some teachers have even been known to have pupils write their social security numbers on all homework and tests, exposing students anyone who bothers sifting through the school's wastepaper baskets.)
With a down economy, parents and family members might be more likely to turn to identity theft as a way getting their hands on additional credit.
"The majority of cases involve parents who may be going through a tricky time, going through a divorce and looking for additional credit," said Purl, Chief Operating Officer for Grand ISS, a St. Petersburg-based investigative security firm.
Purl said with more people out of work, identity theft cases involving young children are likely to increase.
"I think we're going to see more crime in general, as money is more tight for people. We've seen that with credit card fraud and white-collar crime. It's an easy way to make money," Purl said.
How Can We Protect Our Kids?
It's becoming increasingly important for parents to help their kids get savvy about giving away personal information on the internet, or over the telephone. Beyond that, responsibility falls on parents to be vigilant about who they send copies of birth certificates to, and to notice things like debt consolidation notices coming in the mail addressed to their children.
For more on how to prevent childhood identity theft and what to do if you think your child has been targeted, check out this fact sheet from the Identity Theft Resource Center - www.idtheftcenter.org.
We're stepping a bit outside our normal comfort zone of covering scams, fraud, identity theft, and whatnot to present an offer that we think will be valuable to our readers.
For a limited time Suze Orman is making her latest book "Suze Orman's 2009 Action Plan | Keeping Your Money Safe and Sound" available for free via the Oprah Winfrey web site.
NOTE: Offer expires at 11:59 p.m. CT on Thursday, January 15
Why Should You Read This Book?
I have to admit that I haven't read the whole book yet. I wanted to get this posted so you would have time to download it before the offer expires.
What I have read, however, speaks directly to these ugly economic times. I see my friends in the U.S. and elsewhere struggle with layoffs, home foreclosures, business failures and every other kind of stressful situation. Unfortunately things don't look like they'll be improving anytime soon and we're all wondering how we're going to survive this downturn.
I think Suze says it best in her Introduction:
I bet you are scared. Angry, too. And confused. These are absolutely rational and appropriate responses to the global credit crisis that erupted in 2008 and continues to send tremors through every household in America. And I do mean every household. No matt er how conscientious you have been with managing your money, the events of 2008 have battered us all.
The one in 10 homeowners who are at risk of facing foreclosure on their homes are obviously scared, but so too are the 9 out of 10 homeowners who can afford their mortgage but are watching plummeting home values jeopardize their financial security.
It’s not just the overreaching Wall Street firms who are paying the price for those risky investments. Every U.S. taxpayer is now on the hook for a massive bailout — bailout engineered by the same players in the federal government that had turned their back on regulating the very practices at the root of today’s financial crisis. Angry? You should be.
In any case, the book is free until January 15th, so it won't cost you more than a minute or two of your time and a few bytes flowing over your internet connection.
I think it will be worth your while. Take care out there...
Go the the download page on the Oprah Winfrey website. Once the offer expires you can buy the book for less than $10 on Amazon
In case you want to learn more about the book, I've provided some Amazon reviewer comments and the table of contents:
Amazon Reviews
Suze hit it big with this book for many people. She wrote a precise book on how to handle 2009 proactively with specific "what to do" situations and how to assess financial challenges into correct decisions. Picking this book on Borders out of curiosity, I learn a lot from security precautions you should take from local banks. That alone pays the trip and the well deserved $10 I paid over a Dolce Latte over the quick read.
This is hands down Suze Orman's best book. Upon reading every word and turning every page I felt confident that I am on the right track. Following Suze's advise over the years has provided me with the education required to be prepared for what lies ahead. The Expenses breakdown chart is a very helpful tool to see where you can cut back. I also loved the format in which this book was written, it can be used as a reference tool and you can read based on your area of concern be it credit, 401k, retirement etc. I think everyone should not only read this, but live by it!
See the rest of the reviews on Amazon
Table of Contents
2009: The New Reality
A Brief History of How We Got Here
Action Plan: Credit
- Falling credit lines
- Rising interest rates
- FICO scores under pressure
- Repayment plan
- Debt consolidation
- Borrowing from 401(k)
- Borrowing from home equity line of credit
- Bankruptcy
- Collection agencies
- The case for stocks
- Allocation strategies
- 401(k) loan/early withdrawal
- IRA rollover
- Retiree income strategy
- Roth IRA conversion
- FDIC insurance
- Money market deposits
- Eight-month emergency fund
- Credit squeeze
- Expense/income worksheet
- Finding ways to save
- Needs vs. wants
- Insurance saving tips
- Car loans
- Dif?cult choices
- A challenge from Suze for 2009
- Mortgage-modi?cation options
- Short sales
- Foreclosure
- Home equity line of credit
- Home values
- First-time-buying tips
- Pre-retirement strategy
- Vacation homes
- 529 allocation strategy
- What you can afford
- Federal loan strategy
- Stafford student loans
- PLUS parent loans
- HELOC loans/401(k) loans
- Private student loans
- Repayment
- Consolidation
- Job-loss strategies
- Hope for the best, prepare for the worst
- Health insurance
- Life insurance
Action Plan: Retirement Investing
Action Plan: Saving
Action Plan: Spending
Action Plan: Real Estate
Action Plan: Paying for College
Action Plan: Protecting Your Family and Yourself
The Road Ahead
For the second year in a row, malware has been discovered in major-brand digital photo frames, carried by some of the nation's biggest retailers.
Software that came pre-installed in frames manufactured by Samsung, Element, and Mercury, was found to enable the "Autorun" function in Windows, allowing it automatically install malicious code to a PC whenever it is connected. The nature of the malware varied with the device, and it isn't even yet clear in some cases whether the malicious code was put there intentionally, or if it simply replicated itself from an infected computer used in the manufacturing process.
This problem isn't just contained to digital frames though. In past years, a variety of electronic gizmos—from flash memory sticks to satellite navigation devices—have all been found to pose security threats.
Peripheral Devices And You
What do most of the popular electronic holiday gifts such as digital cameras, music players, photo printers or even cell phones have in common? They're all "peripheral devices"—meaning that they have to be connected to a personal computer in order to become fully functional. Without these devices, our home computers remain just that—stationary libraries of songs, photos, and other data, inaccessible to us when we're outside of the house.
What many consumers don't know is that anything capable of downloading data given to it by a computer, is also capable of replicating its data onto that PC in the process. So before you plug a new device into your USB port, there are a few steps you should take to keep your computer safe.
Digital Photo Frames Can Contain Malware
What You Can Do
As always, the best way to protect your computer is to have a good, up-to-date anti-virus program installed and running at all times. These programs can identify almost any potential threat and neutralize it immediately upon connection of a device to your computer.
Staying away from cheap brands you've never heard of before (like those $15 drug-store digital cameras or MP3 players,) is also something many experts recommend. But top-notch anti-virus software should be enough to protect you—even from those yPod and Suny products you might find at the flea market.
Medical identity theft is a growing problem. Experts estimate that between 200,000 - 500,000 people are already a victim of this crime - and most don't even know it.
The World Privacy Forum has been a pioneer in identifying and researching medical identity theft issues. Here's how they describe the problem:
Medical identity theft occurs when someone uses a person's name and sometimes other parts of their identity -- such as insurance information -- without the person's knowledge or consent to obtain medical services or goods, or uses the person’s identity information to make false claims for medical services or goods. Medical identity theft frequently results in erroneous entries being put into existing medical records, and can involve the creation of fictitious medical records in the victim’s name.
Medical Identity Theft Basics
So how does medical identity theft occur and how can it affect you? Here's a video from CBS' The Early Show that explains the basics:
Medical Identity Theft
How Can You Protect Yourself?
The World Privacy Forum has great information on detecting and preventing medical identity theft. Here are the things to watch:
- Closely monitor any "Explanation of Benefits" sent by an public or private health insurer
Health insurance companies often send out notices in the mail that describe recent medical events. Pay attention to these and contact your health care provider if they don't look familiar.
- Pro-actively request a listing of benefits from your health insurers
- Request a copy of current medical files from each health care provider
Look over these files to make sure that all the information is familiar. Report any errors or strange information to your health care provider.
- Correct erroneous and false information in your file
- Keep an eye on your credit report
Medical expenses should eventually show up on your credit report - especially unpaid accounts that were created by an identity thief.
- Request an accounting of disclosures
This is a benefit of HIPAA (the Health Insurance Portability and Accountability Act). This relates to all of the documents you now sign when going to your doctor relating to privacy and information sharing. You can request a list of all the times your medical information has been shared along with the reason for sharing.
More information from World Privacy Forum.
Mark Cuban & Tommy Hilfiger are the latest victims of identity theft.
The UPI is reporting that a 23 year-old New York man - Gregory Mortel - was able to have credit cards issued to him using the names of famous people, including Dallas Mavericks owner Mark Cuban, clothing mogul Tommy Hilfiger, and George Hornig, the chief operating officer of investment bank Credit Suisse First Boston.
I'm wondering why a thief like Mortel chose to steal the identity of rich & famous people. Certainly their wealth would enable a sizable credit line via American Express, but wouldn't he worry that the faces of Cuban and Hilfiger would be instantly recognizable when he tried to use the credit card?
Evidently not...
Mr. Mortel was brazen enough to boast that he would never be punished. Here's what he had to say:
The source said investigators had Hornig call Mortel's cell phone and the suspect said during the call, which was recorded by police, that "nobody will ever be able to trace him to any wrongdoing."
Ooops!
Why Wasn't He Caught Earlier?
We obviously have a problem with our credit system when virtually anyone is able to gather and use someone's financial information to open new credit accounts and use them openly - especially when the victims involved are famous and have very recognizable faces.
Did anyone ask him about his name? Tommy Hilfiger is not a common name. Surely someone at the Equinox gym - where he was picked up by the police while getting a spa treatment (paid for via an American Express issued to Tommy Hilfiger) - should have asked him about having a name identical to a very public figure. Did they even look at the name?
UPDATED: Kate Weinberg, the manager of the Equinox gym, has set the record straight regarding the credit card used by Mr. Mortel. Evidently it was issued by Amex to Gregory Mortel but used the same number as Tommy Hilfiger's card. We apologize to the staff of the Equinox gym for our error in assuming they had not checked the signature on the card. See all of Ms. Weinberg's text in the comments below.
It reminds me of a hilarious experiment by John Hargrave on Zug.com where he signed his credit card receipts in all kinds of ridiculous ways, just to see if anyone would notice.
Here's a sillier example - signing as Shamu on a visit to New England Aquarium:
Hargrave describes his experience like this:
Now, someone should have caught this. First of all, everyone knows that Shamu works at Sea World. Second, how could Shamu accurately render a scale drawing of himself? That kind of penmanship would be unlikely from a creature using only its vestigial fins.
No one noticed. No one cared. No one said a thing.
That's why scammers like Gregory Mortel have no fear when it comes to ruining people's lives. It's up to us to protect ourselves. No one else is going to do it.
Whether you're a business traveler touching base with the home office or a vacationer catching up on some last-minute Christmas shopping during holiday travel, airport wireless networks are a welcome distraction during a layover.
But beware...
According to a recent article in Forbes, anyone who logs on using an airport wireless connection is instantly exposed to data and identity theft.
How Bad Are They?
Forbes interviewed a so-called "white-hat hacker," working for AirTight Networks (which makes wireless security software and hardware,) and found that during AirTight's survey of 20 American airports, agents had identified serious security flaws in nearly every network. Some airports even allowed critical baggage handling and ticketing data to pass through their network unencrypted---a potential security risk in more than just the digital sense.
The purpose of the tests was to alert airports to the problem in the hopes that they would choose to hire AirTight as their security provider, but in the short term, let it stand as a warning to travelers: You are nowhere near as safe logging in at an airport hub as you are even at home. Even shopping malls and many universities provide more network protection to their users, and since there are currently no laws on the books that require airports to try any harder, don't expect any of this to change overnight.
Here's a quote from Forbes on how bad things are:They found rampant phony Wi-Fi hot spots created by phishers and, at several large airports, plenty of open or insecure networks run by critical operations such as baggage handling and ticketing. Almost all public networks allowed data such as user names and passwords to pass through the air unencrypted. Only 3% of people used something more secure.
How Do I Stay Safe?
Most security experts would recommend these four steps to relative safety on public wireless networks like those found in airports:
- Be sure that you're connected to a legit network. Phishers sometimes set up bogus hotspots in airports, waiting for unsuspecting travelers to log on.
- Use a firewall.
- Don't type in any credit card information or critical passwords while connected to these networks.
- Disconnect from the network when you're not using it.
These steps won't guarantee you 100 percent safety, but it's a good start if you decide that uploading those Christmas photos to Flickr can't wait until tomorrow.
This video from Forbes provides more details on what you should watch out for:
According to investigative reporters for WirtschaftsWoche, 21 million Germans have had their personal information stolen along with their bank account and bank code numbers. The thieves are offering to sell the data for 12 million euros (about 15.3 million dollars). It is believed the scammers gathered the data by using employees at financial institution call centers.
Could this happen in the U.S.?
It certainly could. Privacy laws throughout Europe are generally tighter than U.S. laws and Germany is among the tightest. Low employee morale, caused by a deteriorating job market and chaos within the financial sector makes crimes like this more likely. I'm sure it's tempting for employees to grab whatever data they can as they're shown the door or maybe they're just looking to add to a mediocre salary. Whatever the reason, it may be time to buckle up and prepare for a bumpy ride.
What could criminals do with this data? Make bank withdrawals.
Criminals can use the bank account info to make withdrawals - either big or small. A .57 cent bank withdrawal from 21 million accounts still ads up to... ummm... let me get my calculator out... $11.97 million dollars. And that's this month, and next month, and the next month, etc. until they're caught or they decide to make a big withdrawal and run.
Here's their strategy, detailed in an IT World article:
Although banking passwords were apparently not included on the CD, criminals would be able to use this data to withdraw funds from a victim's account, said Thierry Zoller, an independent security consultant based in Luxembourg.
Scammers could use this type of information to initiate a large number of debits from German banks, making each withdrawal small in hopes that it would not be noticed by the victim, he said.
This is why carefully checking your bank records is important. If you see a unexplained entry - even if it's small - you should track it down until you understand where it came from. Otherwise you might unexpectedly see a much bigger withdrawal from the same source somewhere down the line.
More about this story at the WirtschaftsWoche in English and German.
You can also find coverage at The Register, and IT World.
Thanks to our friends at Kroll Fraud Solutions, we have some excellent 2008 tax season tips for avoiding identity theft:
The U.S. economy may not be the only beneficiary of the recently passed federal economic stimulus package – identity thieves are getting a boost, too. Why? In the wake of the recent IRS announcement that more than 130 million Americans will receive tax rebates this year, identity thieves are using the promise of extra cash to lure Americans into disclosing their sensitive personal information.
These “phishing” schemes can take a variety of forms, the most common of which involves an identity thief who calls or e-mails a consumer pretending to be an IRS employee. The consumer is promised a sizable rebate if they file their taxes early. All the caller needs in exchange is the consumer’s bank account number to deposit the check.
The bad news is that schemes like the one described above are common; the good news is that falling victim to one is avoidable – as long as consumers get smart on the facts and follow the proper precautions.
Below ID theft expert Brian Lapidus, chief operating officer of Kroll’s Fraud Solutions, offers some important advice that every consumer should know about protecting their personal information during tax season. At Kroll, Lapidus oversees a highly-skilled team that includes veteran licensed investigators who meet regularly with IRS agents to stay apprised of emergent tax fraud issues – bolstering the team’s specialized work supporting breach victims and restoring individuals' compromised identities to pre-theft status.
Preparing your taxes?
- Beware of phishing schemes. The IRS never contacts consumers by e-mail or phone to request sensitive personal information (SSN, checking account information, etc.). If you receive a phone call or e-mail that you suspect may be a “phishing” scam, file a complaint with the Anti-Phishing Working Group and contact the IRS immediately.
- Avoid shopping mall kiosks or pop-up preparers who offer to assist you with tax preparation. Considering the amount of sensitive personal information involved in the tax preparation process, you probably don’t want to hand over your files to someone whose experience and background are unfamiliar to you. Ask a trusted friend to introduce you to his/her tax preparer or consult a local CPA association for trustworthy members.
Filing electronically?
- Avoid using wireless networks. Use of wireless networks means your data is being transmitted over open airwaves, similar to a radio transmission. If not properly secured, data can easily be picked up by an uninvited party.
- Don't prepare your taxes on a public computer. Public computers can contain “keylogger” spyware, which records every keystroke including passwords and account information. Keyloggers make it possible for an identity thief to steal any information entered into the computer during your session. Preparing your taxes on a public computer also increases your vulnerability to “shoulder surfers” – individuals who look over your shoulder to observe what you are doing and, more importantly, collect the sensitive data you’re entering.
- Only keep a record of your tax claims as long as necessary. Thieves can't steal what you don't have. Purge the data once the need for it has expired. Suggested guidelines for individual recordkeeping are available online through the IRS at: http://www.irs.gov/publications/p552/ar02.html#d0e617.
Filing by mail?
- Don't put your completed claim in an unlocked mailbox for pick-up. Instead, deposit outgoing mail at a post office.
- Take it one step further and opt for delivery tracking. That way you can be certain that your information has gotten to the IRS safely.
- Waiting for your tax rebate? Promptly remove mail from your mailbox after delivery. The longer your mail sits in an unsecured mailbox, the greater your chances of it falling into the wrong hands.
- You may also choose to have the IRS deposit your tax rebate directly into your bank account, further minimizing the risk of theft.
Every one loves a "Top 10" this time of year, so here is a great one from our friends at Kroll Fraud Solutions. It was put together by Brian Lapidus - Kroll Fraud Solution chief operating officer and identity theft expert.
Enjoy!
1. Beware the Word "Prevent"
No person and no product can prevent identity theft. As long as criminals can benefit from stealing, there will be theft. Sensitive personal information (SPI) is everywhere, housed and archived in a mind-boggling variety of ways. Individuals and companies can reduce access to SPI and improve safeguards around it by working to change how we share, collect, store and dispose of information.
2. There Are No Guarantees
This mantra holds true for a lot of things in life and dealing with identity theft is no exception. While a number of instances of fraud can be restored to pre-theft status, some identity dilemmas simply can’t be fixed. If you’re on the ‘no fly list’ thanks to an imposter or an error, you’ll stay there. A third-party solution cannot deliver a remedy.
3. Watch for "Shoulder Surfers" and "Skimmers"
Shield the entry of personal identification numbers (PINs), and be aware of people standing entirely too close by when using your credit or debit card in public. Especially with the advent of cell phone cameras, a sneaky, shoulder surfing thief can get your private information pretty easily, if you’re not careful. It’s also advisable to use teller machines that are familiar to you, so you are in a better position to identify when the equipment looks different or doesn’t “feel right.” Your increased awareness may reveal a skimmer’s attempt to steal PINs and banking details at that site.
4. Keep Your Social Security Card Safe at Home
Unless you’re on your way to fill out a job application, there are very few reasons to carry around the crown jewel of SPI. At lunch a few weeks ago, the woman beside me opened her wallet for a credit card and there was her Social Security card, too. Remember, ID theft and fraud are not exclusively credit-related – thieves can use a clean Social Security number to construct a whole new life.
Additional note from Dave: I regularly receive emails from Fight Identity Theft visitors explaining how they just had their purse or wallet stolen with their Social Security card inside. Remove that card today!
5. Destroy Before You Dump That Old Computer
Erasing data just enables the computer to write over that space again; it doesn’t actually eliminate the original bits and bytes. Physically remove the hard-drive to ensure you’re not tossing out or passing along your personal details. Our company is often called upon to recover data from an erased or damaged drive; we’re very good at it – and so are some professional thieves.
Additional note from Dave: You could also consider using a software tool like Eraser to do a complete wipe of your drive. If you physically remove your drive, smash the drive with a hammer (find someone strong) before throwing it in the trash.
6. Choose "Forget Me’ Instead of "Remember Me"
How many Web sites do you frequent that invite you to enable an automatic log on the next time you visit? Don’t check that box! When convenience trumps confidentiality, you’re asking for trouble. The harder you make it for hackers to follow your trail into an online store or bank account, the better.
Additional note from Dave: This is absolutely necessary when using public computers. In fact, you should avoid accessing any secure sites from a public computer (like a library, internet cafe) or when using a public wireless network or wifi hotspot.
7. Don’t Rely On Fraud Alerts Or Credit Freezes Alone
Fraud alerts are meant to stop an identity thief from opening new accounts in your name. Credit freezes let you restrict access to your credit report, which would also make it hard for someone else to open new accounts. But, neither one will stop a thief from trading your SPI for cash, or using it for tax fraud or in any of the countless other ways fraudsters exploit stolen identities.
8. Practice Prudent Posting
Social networking sites on the internet enable individuals around the world to chat, share photos, recruit employees, date, post resumes, auction property, and more. Because the Web makes it possible for any posted document to link with another, any data you put out online have the potential to stay there for what amounts to electronic eternity.
Additional note from Dave: I suggest creating usernames or an email address that don't contain your name or anything traceable to you, whenever possible. You also might consider using different usernames on different sites. This makes sense because if someone is able to determine that you use "CatLuvr55" on one site, it's an easy search to track down "CatLuvr55" on any other sites where you have a profile.
9. Keep That Key
When you check out of a hotel where you were issued a card-key to unlock the door to your room, don’t leave the card-key behind. Hold on to it until you’re safely home and can shred or otherwise discard it safely. Some say it’s an urban myth that the card-keys hold vital details like credit card numbers, while others report having tested and confirmed the presence of private data coded into the magnetic strip. Even if there’s no definitive answer, why risk it?
Additional note from Dave: Not sure I'm convinced on this one. I'd need to see more data showing that it is a problem. Snopes.com debunks this pretty thoroughly.
10. What’s In Your Wallet?
Make photocopies of the personal material in your wallet: Driver’s license, credit cards, insurance cards, all of it – front and back. Should your wallet be lost or stolen, you won’t be left wondering what was actually taken, and you’ll be able to quickly notify the appropriate agencies about what has taken place.
Charles Darrow patented Monopoly in 1935. Since then, millions of people have turned giddy when receiving the "Bank Error in Your Favor" card from Community Chest.
Unfortunately, bank errors are nothing but a hassle in real life - the only thing you collect is a headache and frustration. To help reduce the headache, here are 10 things that everyone should know about bank errors:
Be Patient
The problem will not be solved over night. Banks process many transactions every day and it may take a few days for them to track down and solve your problem.
Be Quick
Call in the error to the bank supervisor (there isn't much that a teller can do) as soon as you discover it. The sooner the bank can start looking into it the better.
Keep Notes
Keep quality notes of who you talk to, when you talked to them, and what was said/promised. You may need to make several phone calls and it helps to be able to clearly state who you spoke with and what was said. You also may be required to provide documentation somewhere down the line of what you did. Good records will help make this as painless as possible.
Know the End Game
Ask for a date when the problem should be resolved. This will help keep the bank focused on solving your problem in a timely way.
Dodge Bounced Check Fees
If the mistake is an under deposit (you end up with less money than you thought), you should ask the bank to cover any fees that may occur because of the shortage of funds. The bank should cover fees to fix the problem and any others that occur because the correct amount of funds was not in the account
Don't Spend the Bank's Money
If there is an over deposit, don't spend the money. It might be tempting if the bank accidently deposits an extra $10,000 in your account. Unfortunately the money isn't yours and you shouldn't assume that the bank is going to let you keep it. If you do spend it you are just going to have to give it back - possibly with penalties or jail time if you can't return the money in a timely fashion.
Don't Move the Bank's Money
Don't be tempted to move the money to your brokerage account so you can make some nice interest or buy one of your favorite stocks. Leave the money in the account so the bank can figure out how it got there. Don't take the money out of the account so you don't spend it. The bank needs it there to track where it came from. Also, the money needs to be in your account when the bank figures out where it goes and decides to move it out of your account.
Stop Dreaming
The bank's not going to let you keep the money. Yes, the bank makes errors, but they are not going to let you keep somebody else's money because they made an error. Get over it. Stop dreaming about that Hawaiian vacation or a mall spending spree. It's not your money.
Complain or Switch
Some people seem to have bad luck when it comes to bank errors. I've been lucky and have had very few, but if you're having to deal with a lot of errors you should complain. Call customer support and ask to speak with a supervisor. Let them know how much of a hassle these errors have been. Have a reward in mind for how they can keep you as a customer. If you have a credit card, ask them to lower the interest rate. If you're paying monthly bank fees for your account, ask them to wave them.
If they're unwilling to do anything for you it's probably time to move to a new bank.
Act Fast on ATM Issues
You only have 60 days to report an ATM transaction error. So, if the ATM records show that you took out more money than you actually did or vice versa, you must report it promptly or you are out of luck.
A bank error is not the joyous occasion that Monopoly suggests. It's more like a "Go Directly to Faceless Corporate Bank Hell" card. Follow these ten steps, however, and you'll survive mostly unscathed.
One more thing...
We've noticed on a different blog post - British Lottery Scam - that people are tempted to take a bad check and deposit it, hoping that the bank will become confused and give them the money. Here's how one poster puts it:
I received the lottery scam in the mail. There is a check enclosed that is to be cashed and sent back to pay the British taxes. What would happen if I cashed the check and kept the cash? Would the scammers loose the money?
Ummm... no. Checks like these are forgeries. The scammers don't loose money. You just create a problem for yourself by depositing a bad check, temporarily inflating your bank account, and then suddenly having it removed once the bank figures out it's fraudulent.
Does that sounds fun?
To learn more about bank errors, visit the always excellent bankrate.com.
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