Know your rights on bank account fraud

Bob Sullivan Technology correspondent • Profile • E-mail

Marci Horn's three small children needed her attention more than ever. Her husband's sudden death had left her their only caregiver. Suddenly, the 39-year-old Bethesda, Md., woman had to do all the hugging, all the talking, all the earning — and for the first time she had to take care of the family finances.

So when she received an e-mail that appeared to be from SunTrust last November, she was confused.  The e-mail asked her to update her account information. She ignored it, and several others.

"But they became more and more urgent," she said.

So finally, to get SunTrust off her back, Horn clicked on the link and filled out the form.

"I was trying to be responsible, trying to take care of everything," she said. Instead, she found herself in an even bigger hole. A few days later, when she went to withdraw money from her checking account, it was $800 overdrawn.

Within one day, Horn said, her account information had made its way all around the former Soviet Union. A Fraud Charge List she received from the bank, which she showed MSNBC.com, reveals a remarkable pattern.  A $114.04 withdrawal from Obolensk, Russia — then another, the same day, for $380.13.  Three days later, there's a $190.21 withdrawal made in Kyiv, Ukraine.  Then a $380.09 withdrawal in Domashna, Latvia.  Eventually, along with other charges, there are $224 in non-sufficient funds charges. The tab ran up to $3,000.

Horn believes someone used her information, gleaned from the responses she gave to that one e-mail, to print up clone ATM cards. The cards were then used to make withdrawals at money machines. The scam is called “white card” fraud.

Last week, MSNBC.com reported that white card fraud is on the rise, and some banks weren't doing all they could to protect consumers. But you can get a refund from the bank if it happens to you — even if the bank at first tries to make you pay for the fraud.

Your  rights explained
Federal banking regulations provide broad protections to consumers like Marci Horn, even when they accidentally surrender bank account information and PIN numbers. But consumers who are unaware of their rights might end up unnecessarily footing the bill.

Initially, Horn assumed all was lost because she had fallen for the e-mail trick, known as phishing.

"I figured it was all my fault, there was nothing (the bank) could do," she said.  But she followed up with SunTrust anyway, and after three weeks, the firm had refunded her money. SunTrust spokesman Hugh Suhr refused to discuss Horn's case, citing customer privacy.

Horn's case is covered by what's known as "Reg E," a set of regulations issued by the Federal Reserve that governs all manner of electronic transactions. That includes online banking, ATM withdrawals and debit card payments. The rules bear some similarities to those regulating credit cards — where consumer liability is capped at $50 — but there are some important distinctions.  In short, consumers who don't act quickly in the face of an ATM or debit card fraud face the possibility of losing everything in the checking account.

Horn got her money back because she went to the bank immediately after discovering the losses. When an ATM card, PIN number, or online banking password is stolen, consumers must report the loss within two days of receiving their bank statement that reflects the fraud, according to Reg E.  Consumers who do so are only liable for $50 in losses, much like credit cards.  But waiting a third day can be costly; liability jumps to $500.  And if a consumer waits more than 60 days, the liability is unlimited. 

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