Last time we began our story about customers of a major bank who wound up in the hands of either a crooked or incompetent investment advisor who misled them, causing a loss of $2,000.

They heard the same friendly question bank employees all over the country, from tellers to personal bankers, ask customers who have nice, secure, FDIC-insured accounts earning virtually no interest: “Would you like a better return on your money?”

Some customers will reply, “Thanks, but no thanks,” possibly having an adequate pension and not needing to worry that much about a little more return, or maybe being suspicious of what might happen if they say yes.

Our trusting couple said yes. They were referred to David, “And, with his title of certified financial planner and bank vice president, we thought this meant he was both in management and a stockbroker with a higher degree of knowledge and competence,” the retired high school teacher explained.

Nick was going to be in for one costly surprise.

No stranger to misleading a customer

Nick and his wife Marva were savers and had over $400,000 in a portfolio management account.

A nice, fat, juicy insured account can cause bank employees – from tellers, managers and stockbrokers – to begin rubbing their hands and drooling. Properly placed into a non-insured investment, thousands of dollars in commissions for the bank and stockbroker are generated, all nicely paid by the customer.

“Often, completely inappropriate investments are sold to the elderly, such as annuities which lock them into outrageous early termination charges, poor returns and potentially huge losses of money they need to live off of. So often alone, with no one there to tell them to just wait, and not understanding what they are getting into, they become victims,” according to a broker with another bank.

But Nick and Marva were not sold an annuity. They were sold $200,000 positions ($100,000 each) in two separate mutual funds. During three separate meetings with David, they were assured there was no early withdrawal fee or penalty if, for whatever reason and no matter when, they wanted to just pull the plug and sell.

“Nothing in and nothing out,” David repeated. One of the mutual funds was as he represented – no surrender charge. But the other had a $2,000 hit, “which he easily could have determined, should have known about and had a legal duty to know,” according to both a legal expert and stockbrokers interviewed for this story.

Public records reveal that David was no stranger to telling a client, “There is no surrender charge.” At the same time he was dealing with Nick and Marva, he was facing a FINRA complaint from another customer of the bank for the same thing: “No mention of any withdrawal penalty to close the account.”

Let’s just blame our customer

David, his supervisor and other bank staff confirmed the misrepresentations and gave initial assurances to the couple that the situation would be remedied. You and the Law also confirmed those statements and the specific admission from David of his error.

But then, backpedaling on an amazing level began, with the matter referred to the bank’s legal department in St. Louis and specifically to Chris, a non-attorney bank employee who Nick described as “uncaring, not dealing with the facts, and blaming the customer.” We also spoke with him and can’t disagree with a thing Nick stated. Chris also promised to have one of their attorneys call us back. We are still waiting.

The bank owes this couple a refund, but the larger story is for anyone who so much as thinks they can trust financial advisors who might work in their bank. Trust is not the word. While they have a duty to be honest and hopefully competent, legally they are not in a position of trust with you. They are selling a product and after a commission which you will pay for.

Don’t be a sucker

“Do not think that, merely because you know everyone in the bank or credit union, that anyone is watching out for you. Interview several financial advisors, listen, look, and try to get a feel for that person’s honesty and knowledge. Ask your friends who they use and who they would stay away from. Don’t be in a hurry to select anyone,” stated the broker with the other bank.

We happened to be in David’s town recently, and dropped into one of the offending bank’s branches. Seated at the financial advisor’s desk was an elegant, elderly couple, clearly in their late 70’s or 80’s, talking with a handsome, and ever so confident, smooth-talking advisor.

We clearly saw the elderly customer mouth the word “annuity.”

Walking to that desk, we asked for the financial adviser’s card, which he handed us with such a sincere smile. It was David.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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Today’s story will be of interest to anyone who understands the importance of saving money for that rainy day and retirement. Despite all the bad news, there are still lots of folks who have done the right thing: just saved money. Sure, there’s not much in the way of interest being paid at present, but it’s still money in nice, FDIC-insured bank accounts.

But not for long if some of your bank’s employees have anything to do with it. As we were told by a vice president of investments and financial advisor for a major bank, “for anyone with $50,000 or more in a low-interest bank savings account or CD, they are a target of that bank’s investment advisors.”

In fact, at some institutions, all you need is $10,000 to become a target we learned from a number of other sources.

You might be phoned around the time a CD is maturing, or when you come into the bank, and either your regular banker or even a teller will ask if you would like to earn more interest. Usually everyone says yes, and then an appointment is set up to meet with an investment advisor.

“During that meeting, we try to sell an investment – a mutual fund or annuity – something which takes their funds out of an FDIC-insured account, might have better financial returns, but which earns us and the bank a commission.

“I have seen so many unsophisticated people who should never have been in those things and lost a great deal of money,” the financial advisor told You and the Law on the condition of not revealing his name.

The advisor had a history

In late 2010, at the recommendation of their personal banker “to help us get more interest on our savings,” Nick and Marva met with David, a financial advisor with a major bank.

The couple did not know it at the time, and also did not know how to check out a broker’s past, but David had a complaint history with FINRA, the Financial Industry Regulatory Authority. The retired couple were about to discover that history does indeed repeat itself – and it has a price tag.

“We have always been savers, and had never before purchased shares in a mutual fund,” Nick explained.

“Our nature is to be cautious, and we were very specific about what we did not want to own,” Marva stressed.

“We did not want any investment with surrender charges. So, if we decided just to sell, we understood share values could go up or down, but we did not want to be hit with a fee for getting out,” the couple told David during their several meetings.

“As he was also a certified financial planner and a bank vice president, this should have meant a higher level of knowledge and competence than the average stockbroker, we thought,” Nick added.

David has admitted to this writer that he was aware of the couple’s “no surrender charge or penalty” requirement well before selling them $200,000 in two different mutual funds, and that he thought there was no such penalty.

What do you mean I just lost $2,000?

“Within a few days, we had an odd feeling about these funds, about everything,” Marva explained, “and we told David to just sell and get us out.” A few days later, Nick phoned David, and then learned that one of the funds had a surrender fee of $2,000.

“I didn’t know it had a charge when I sold it to you,” the bank vice president stated, without even so much as an “I’m sorry,” and certainly not offering to take responsibility.

“Legally, it was his business to know if there was a surrender charge, since the information is easily obtainable for brokers,” commented Philadelphia securities attorney Nicholas J. Guiliano when we discussed the facts of this case. “This amounts to a clear misrepresentation, and the couple are owed a complete refund of their losses. There is no excuse at all.”

We also obtained opinions from three stockbrokers, each having more than 20 years experience with major investment companies. They confirmed that David and the bank were responsible for the loss. “It was his duty to know, and he could easily have discovered if there was a surrender fee,” one said.

Initially, David’s supervisor and other bank personnel accepted responsibility. Everyone Nick and Marva spoke with locally assured them that a refund was clearly in order. But soon all of this “Let’s do the right thing” stance would change. Ever so gradually, the nice people at in the investments department of the bank looked for a way to blame the customer.

Next week: The matter reaches the bank’s legal department, where common sense is in extremely short supply.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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 On occasion, it becomes clear that someone calling You and the Law is suffering from mental illness and has had difficulty in explaining their legal problem to an attorney’s secretary or paralegal in an understandable manner. At times, rambling incessantly about things unrelated, they wind up never put through to the lawyer.

Then by going online, and researching a key word, up pops one of our articles that deals with a problem similar to theirs. We listen, even to their rumblings, which often yield a clue enabling us to help them.

Such was the case with “Denny,” who lives in a small mountain community in California’s Southern Sierra Nevada. In mid-May of this year he phoned us.

“Mr. Beaver, I read your story about the lady who you helped find her safe deposit box at the Bank of America, and I am in a similar situation. They won’t let me get into my box!” he stated, going from calm to angry within seconds.

No California I.D. or driver’s license – involuntarily committed

“Why won’t they let you in your box?” I asked.

“They need a valid form of state-issued photo ID. My Veteran’s card has no photo, and I do not have a California I.D. or driver’s license,” he replied, with an explanation that opened the door to his state of mind:

“I had a temporary license but never got my real license. Each time I go to DMV they refuse to help me and call the police! That’s why I’m calling you! I want to sue the State of California. I’ve already sent letters to the Governor, our senators, the White House, and those people at the bank had better watch out!”

Practicing law a long time, you get a feel for people, and somehow just know the answers to question you’re about to ask.

“Denny, please correct me if I’m wrong, but in your past I see you getting in trouble with the law. Am I right?”He immediately replied, “Yes, I violated a restraining order and spent 2 weeks in county jail. A long time ago I had some mental health issues with the VA and even though I was perfectly sane they put me in a mental hospital. Just call my daughter, she will tell you.

(We did. “Dad was diagnosed as paranoid schizophrenic while in the Army. He refuses to take his meds.)

“There’s nothing wrong with me except I can’t get my bonds from the safe deposit box and I hate those people! Also, I know very important issues of national security which could harm them!”

No attorney client privilege – call placed to Bank of America

As these types of calls do not create an attorney client relationship, I immediately contacted Bank of America’s Media Relations Vice President, Colleen Haggerty. She has always been a terrific problem solver for our readers and this time it was our turn to help B of A.

“You have a mentally-disturbed customer who has made non-specific threats against a branch. Please alert your security people. But he may have a legitimate complaint – they won’t let him into his safe-deposit box for lack of proper identification.”

Banks must know their customer

“Due to the Bank Secrecy Act, banks must know their customer, and this includes seeing a Social Security number, driver’s license or state ID,” Jerry Pluard told You and the Law. He is President and Co-Founder of Safe Deposit Box Insurance Coverage, LLC (SDBIC) — the only company in the United States specializing in insuring contents of a safe deposit box.

“In a situation like your reader’s, common sense should apply. Is he a regular customer? Can they ID him with information on record from when he opened the box?

“If a regional manager is contacted, usually the ok will be given to staff who in fact know the customer. Even though he may not have their required ID, knowing him personally should be enough this time, and he should be instructed to obtain proper ID for future visits,” Pluard recommends.

Safety assured – customer got in his box

Bank of America takes these things seriously and we received a call from B of A’s Corporate Security Manager based in California. At the bank’s request, we will just call him Mike. “Protecting our employees is critically important,” he stated, adding, “And we will try to make this a win-win for everyone.”

As she always has, Colleen Hagerty came through, arranging for Denny to get into his box. Over the next several days he repeatedly called our office, each time saying, “Thank you, I got my bonds and closed the box.”

It was enough for us to break out the emergency Valium.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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For anyone who does online banking–especially from a cell phone–then today’s story has relevant, important information. Now, imagine logging in to see if a check deposited earlier that day had cleared, only to discover that your checking and savings accounts have been hacked, leaving zero balances.

Thousands of dollars are missing, but you are adequately cool-headed to do what Kingsburg reader Dillon Nussbaum was advised in early March by his Chase Bank branch manager upon discovering $21,500 suddenly gone:

“Come right over and file an affidavit of unauthorized signature for Transaction.” And that’s exactly what Nussbaum did, detailing how on March 6th funds from savings were moved into his checking account, then a wire was sent to a jewelry store in Florida to purchase a $21,500 watch sent to an address in Las Vegas.

The Chase Fraud Division shows itself incompetent

Federal law states that if your bank account is compromised, you will get all of your money back if you notify the financial institution within 60 days after the fraudulent transaction appears on your bank statement.

If you were a Chase customer, it would be reasonable to expect a thorough, rapid investigation and prompt refund, right? Well, that’s not what happened, as their Fraud Department failed completely to do a proper investigation. Some of the most arrogant, impolite and, frankly, nasty people we’ve ever spoken with in banking blamed our reader, claiming in a March 26, letter that he, “benefitted from the funds.”

They also claimed the transactions were accomplished from his cell phone, “Complete nonsense,” we would later learn from Verizon.

When the people working in a bank’s Fraud Department are told they are on the line with their customer and a syndicated newspaper legal affairs columnist, most employees with half a brain would get real serious, real fast. But it became clear that when brains were handed out, these incompetents weren’t just standing behind the door, they weren’t even in the building.

Las Vegas insurance agent raises suspicions

The $21,500 Chase wire was sent to World of Luxury, located in North Miami Beach, Florida. They sent us all their emails from–now get this–Dillon Nussbaum at 7396 Laramie Avenue, Las Vegas, Nevada. Only the real Dillon Nussbaum had no connection to Las Vegas or Laramie Avenue, which is a rental owned by Gary Lahr, who lives Winchester, Tennessee.

His tenant is Donald Havens, regional sales manager for American Senior Benefits, which is a senior-focused life insurance company. We left several messages for Havens–at home and at his office-informing him that on March 13 at 9 a.m., at his address, someone claiming to be Dillon Nussbaum signed for a $21,500 watch. Does he know anything about this? Can he help us? Please call back.”

We never got a return call, which raised red flags, but Lahr explained, “Havens is like that – not good about returning phone calls unless it is something that he wants.”

Enter two angels – and they don’t work in the Chase Fraud Department

We emailed Heido Flato, Verizon’s media contact for the Western United States, and asked for technical help proving that Nussbaum’s cellphone was not used to send the wire. Within days we had that information, as well as the reason it would be impossible for his phone to have been hacked: “Cell phone IP addresses change constantly.”

We also reached out to Darcy Donahoe-Wilmot, a media contact in the Chase Executive Office. “Will you please have someone look at this account’s history? Who has been accessing it? Your Fraud Department obviously failed to do this.”

Additionally, logs were given Chase proving (1) Nussbaum was not on the cell at the time the wire was sent, and (2) Proof that in the days before the theft, four unknown computers accessed the account–“casing it”- and ceased that access the day the funds were stolen.

On May 17, Chase put the money back in his account! It was a great victory.

We told him to close the account, go to a different bank, and stay away from online banking for a while. He’s followed our advice.

Some final thoughts

When first working on this story, it was not our intention to “bash” Chase. We repeatedly asked to speak with someone who could explain what happened so that we could do an educational article but have been refused that access.

We believe they need to be investigated by the Comptroller of the Currency, the Federal Trade Commission, and SEC. Something is very wrong at Chase. How many others have been harmed this way and treated like thieves?

Finally, a great big THANKS to Heido Flato of Verizon and Darcy Donahoe-Wilmont, at JP Morgan-Chase.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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Patti Davis is a longtime Hanford reader who almost had a real problem with Bank of America, caused by an incompetent bank representative.

What nearly happened to Patti would have easily taken her months to resolve. But she is not alone, as everyday, California residents with a bank account or safe deposit box are at risk of their money or property falling into the hands of the State of California, the result of two words: Dormant Account.

This is an important legal concept to understand, so let’s help you avoid being caught in the trap of what happens with apparently lost, abandoned, or forgotten property. This is not some conspiracy of the State of California to steal your money, but is a legal notion going back, literally, hundreds of years, very much alive and well today in every U.S. State.

California State Assemblyman Roger Niello defined a Dormant Account this way when he and I discussed this problem facing millions of Californians:

“If you or someone in your family has a bank account, safe deposit box, stocks, mutual funds, dividends, insurance policies, trust funds, or money or checks in almost any form which has been dormant — just sitting there with no activity for only three years — you are at risk of having the State claim that property. That’s right, it could all become property of the State of California and go into the General Fund.”

“We all know of family members who set up a small savings account for the kids or grandchildren, to be used for college, or some other purpose, but perhaps never revealed. No one knows how many of these accounts are simply lost, because financial institutions are required by law to turn dormant accounts over to the State. So often the beneficiaries were unaware the property even existed, for many reasons, such as death of a family member, having moved or forgotten about,” he pointed out.

The Unclaimed Property Law

When someone dies with no will, or heirs of any kind, their property winds up with the state in which they lived. We call this Escheat. We say the property escheated to the state. That’s the legal background to Unclaimed Property laws which every state has enacted. This amounts to billions of dollars a year across the nation. This does not mean the property is lost forever, but that can result.

The reason behind Unclaimed Property laws is Protection of those assets, preventing a financial institution keeping the money themselves.

States are required to help locate those with a legitimate claim to lost funds. That was the original intent, with the unclaimed time limit originally 15 years in California But as it became clear there was a lot of money just sitting there, many legal experts feel the time limits were shortened to let that money go into the State’s General Fund if no one came forth to state a claim. From 15 years, it’s now three years.

What do you mean Uncle Charlie was a millionaire?

While it is rare for a person to die with no heirs, it is a lot more common for property to appear either lost, abandoned, forgotten about, or, as in the case of bank accounts or other money instruments, dormant. So now, after three years, the bank or other company holding the funds is legally required to transfer it to the State. Last year, nearly 600 million dollars fell under control of the State Controller’s Office.

Patti’s account wasn’t dormant

“My checking account and a trust account for my niece are linked together, appear on my statement, but the trust account will go to her when she is 18. It does not require doing anything, as only a relatively small amount of money was placed there years ago, earning interest.” Patti told me.

Yes, one account did not have any activity, but it didn’t require any activity! So, why would the Bank of America representative tell her just the opposite?

“She was nearly put through months of hassle by a common problem facing customers of many large banks,” Harold Hansen, Vice-president of Citizens Business Bank told me. Mr. Hanson has over 40 years in banking and has been in senior management positions, including CEO during his career. If anyone knows how banking — and how competence of personnel — has changed, he does.

“The account was absolutely not dormant. These kinds of mistakes happen far too often today, where training in the big banks is frequently an afterthought,” he concluded.

In discussing this case with John Chang’s Office, I spoke with Halley Jordan who put it this way:

“Since 2000, if an individual has two or more accounts at a financial institution and one is active, then none of the accounts or deposits escheat to the State. It is Code of Civil Procedure section 1513. The Bank employee obviously did not know the law, and should have.”

Halley also was quick to point out that her boss is trying to change the law, eliminating the requirements of banks sending contents of inactive safe deposit boxes to the State, “if the owner has another active account at that institution.”

Our recommendations

Sit down with family members and go over insurance policies, bank statements, bank books, investment records, anything that concerns money or income being held in an institution, or payable, such as oil lease royalties. Even going in and having a bank book updated will start the three year time period again.

Financial institutions are required to send a letter advising they fear an account might become dormant, if a great deal of time has elapsed with no activity. While Patti was in the right, I told her to make a 10 dollar deposit to that account, just to be sure.

Finally, visit the State Controller’s Web site for information on how to find out if they have money belonging to you. They have a toll-free phone number, and I found them to be extremely polite and helpful when, just to test them, I phoned to see if they had anything from my family which had been unclaimed.

They did, a college savings account my father began for me and with time, forgotten in a haze of illness so many years ago. In a matter of weeks I received a check in the amount of $4,500 from the State. And what did I do with that money, you might wonder?

It helped to pay the college tuition for the grandson my dad never met.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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There are a lot of people–especially older Americans–who do not trust, or just do not want to have their retirement funds at risk of loss in the stock market. And so they place their money in various accounts at banks insured by the FDIC, the Federal Deposit Insurance Corporation.

This incredibly important, independent agency of the United States government has just celebrated its 90th anniversary, protecting bank depositors against the loss of insured funds in the event their bank or savings association fails.

It is important to understand how the FDIC has proven itself critical to the stability of not only our banking system – and, no exaggeration, our entire financial system. Let’s take a look at why and when the FDIC was established. Two words help explain why.

Bank Run

A bank run occurs when a large group of depositors–fearing their bank will become insolvent–withdraw or attempt to withdraw their money at the same time We’ve all seen photos of thousands of people in long lines–hoping to get their money out of banks during the 1930s Depression and the Great Recession of 2008.

As only about 13 percent of a bank’s assets are in cash that can quickly be depleted. If the institution can’t sell assets quickly enough to meet depositors’ deposit demands, failure can result.

In the 1930s Depression, more than 9,000 banks failed, replacing family’s life savings with poverty and fear. Billions of dollars evaporated.

There was no national deposit insurance system in the U.S. at that time. Recognizing the need to protect bank depositors, President Franklin Roosevelt signed the Banking Act of 1933, creating the FDIC. Funded–not by taxpayers, but through assessments on banks themselves–“the FDIC continues its mission to maintain stability and public confidence in our nation’s financial system and gives Americans the peace of mind their funds were protected.”

How Does Deposit Insurance Work? What’s Covered? What’s Not?

Unlike other types of insurance, just by opening a deposit account at an FDIC insured bank or financial institution, you are automatically covered.

Here are examples of deposit products which are insured by the FDIC:

Money in checking and savings accounts, certificates of deposit, money market deposit accounts, prepaid cards, cashier’s checks, money orders and other official items issued by a bank, negotiable order of withdrawal (NOW) accounts.

However, even if purchased through an FDIC insured bank, these are not insured: stock and bond investments, mutual funds, crypto assets, life insurance policies, annuities, municipal securities, safe deposit boxes or their contents.

What are the Limits of Coverage?

Of course, virtually every type of insurance has limits of coverage – how much will be paid in the event of a covered loss. To learn how this works with insured bank products, I spoke with Washington DC-based Martin Becker, Chief of Deposit Insurance at the FDIC.

“Deposits are insured for up to $250,000 per depositor, per account ownership category, per FDIC-insured bank,” Becker points out, adding, “and the limits of coverage increase by $250,000 with additional beneficiaries on the account, up to a maximum of $1.25 million under the trust category, at one institution.”

“Recently we have simplified the rules for trusts. For your readers with large amounts of money wanting FDIC protection, this is certainly possible if the accounts are correctly set up,” Becker said.

The FDIC has an online tool “EDIE” that has been used by millions of consumers in determining their coverage. I also recommend spending time on our website that explains FDIC deposit insurance ownership categories:

www.fdic.gov/resources/deposit-insurance/financial-products-insured

“Additionally, we have customer service representatives who are able to answer your questions. Just call 877-275-3342 (877-ASK-FDIC)

Recent FDIC Coverage Changes Limit the Number of Beneficiaries

Timing is everything, and the next day after my interview with Martin Becker, 89 year-old Martha phoned my office, upset.

“Mr. Beaver, I have a great deal of money in a bank savings account with eight family members as beneficiaries when I die. A financial advisor I met last year just called and told me that the FDIC coverages had changed and I needed to meet with him to discuss placing some money in stock market investments. Is that correct?”

“Martha, what you were told is nonsense! Yes, the FDIC did make some changes, but nothing requires you to get into the stock market. Each account owner is insured up to $250,000 for each beneficiary, with a maximum of five beneficiaries and a total of $1.25 million insured, per financial institution.”

I related to Martha what Martin Becker advised in this situation. Simply open a new account at a different bank, or several banks. Since Martha has eight beneficiaries, she would be insured for a total deposit amount per bank of $1.25 million. It is important to remember, your deposits are separately insured at each FDIC member bank.

The people at the FDIC really are from the government and here to help.

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

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As you read today’s article, imagine yourself in the shoes of my reader, Dr. Tom, who, like millions of us, has seen customer service vanish at just about every large bank in the country.

We begin with a question: When was the last time that you turned on the evening news and did not see a story about the problem of dangerous narcotics? Now, for a moment, imagine, instead of a warning not to use drugs, you see a commercial encouraging their use.

“Not happening,” you’re thinking. But that is exactly what we all are exposed to when we are urged to use powerful drugs that can ruin families if they’re not managed properly — credit cards.

Many of us have received a preapproved credit card in the mail with literature that says, “To activate, make a purchase of up to X dollars.”

Credit card issuers want us to take vacations we can’t afford and buy things we do not need and cannot pay for with cash.

And, ironically, the more credit card debt we have, the easier it is sometimes to get more credit cards.

Planning a trip and responded to a promotion

But what if you have no credit card debt? Perhaps you pay off monthly charges in full and have no other debt because long ago you said “no!” to taking on debt of any kind?

Dr. Tom has lived within his means and stays out of debt. Through no fault of his own, he created a problem for himself.

“Our family was planning a trip to England and Italy,” wrote retired West Coast dentist Dr. Tom in his email to me. “For over 30 years, I have had a credit card with a big bank and pay all charges in full every month. I applied for their airline-branded card that advertises 75,000 miles for signing up — that I could use for airfare — but was turned down!”

No credit history with the reporting bureaus

He related how he spoke with a customer service rep, who had his payment history on her computer screen but told him the credit bureaus had no record of him or his payments to the credit card company. “‘That’s why you were declined,’” he said she told him.

He escalated the issue to a supervisor and said, “Just look at my 30 years with you. I’ve never been late. You can see that. Besides, you could have reported my payment activity all these years to the credit bureaus, but obviously you didn’t. Come on, someone has to have an ounce of common sense. Please speak with the department that issues the airlines card, explain the mistake and send me the card.”

Dr. Tom took this as high as he could but was turned down each time. He concluded, “Nobody cares. Common sense is not a job requirement at this bank.”

A solution but not at all timely

But it was not over, not yet, because after receiving his email, I got him on the line and called the unit of the bank that handles customer complaints at the highest level and explained the problem. The customer service rep asked Dr. Tom, “Why don’t you have more credit?”

Translation: We can’t make money off of you with interest charges because you pay in full, so why should I help you?

However, he finally agreed to send Dr. Tom’s payment history to Experian. “They will send his credit rating back to us, which will allow us to issue the new credit card, but it will take a month or so.”

“A month or so?” I blurted. “Are you kidding? His European trip is in three weeks. You have the ability to pick up the phone, call your department that issues the airlines cards and tell them that Dr. Tom has a perfect payment history and to send him a new card. Come on, he is a 30-year customer. Do the right thing — fix the problem you guys created by not reporting his payment history to Experian.”

And then, exhibiting his utmost concern for the bank’s loyal customer, the customer service rep hung up.

When faced with arrogant, uncaring people who refuse to act reasonably and solve a problem their organization created, my next step is to contact their media department, because those are the people who can pull strings.

Please help my reader, your longtime customer

In early March, I emailed the media contact at the bank, summarized Dr. Tom’s situation, gave the names of the bank employees we had spoken with and concluded by saying: “Dr. Tom needs someone with common sense to speak with the issuing department and tell them, ‘Look at his history with us. He has been a good customer. Please give him that card in time to use it on the family’s trip to Europe.’”

A week later, Dr. Tom’s new credit card arrived in the mail.

The moral to this story: While most credit card companies report their customers’ payment histories to the credit bureaus, they are not legally required to do so.

How can you check to make sure your payment history is being fairly reported? You can get free copies of your credit reports from all three credit-reporting bureaus (Experian, TransUnion and Equifax) by going to AnnualCreditReport.com.

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.

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If you have a safe deposit box at a financial institution, can you answer these true/false questions?

1. If the contents are destroyed through fire or flood, or broken into, I will be compensated fully by either the institution, FDIC or my Homeowners Insurance.

2. It is against the law to keep cash in a safe deposit box.

3. The financial institution has a master key, so they can go into my box at any time without me being present.

4. What are the two most serious mistakes I can make with my safe deposit box?

Chicago-based CPA/Attorney Jerry Pluard hears these questions often. As President and Co-Founder of Safe Deposit Box Insurance Coverage, LLC (SDBIC) — the only company specializing in insuring contents of a safe deposit box — he has seen his share of unhappy faces of folks who have a safe deposit box, when he tells them:

“Contents of the box are not insured by the bank, credit union or FDIC in the event of theft, flood, fire, earthquake, or any other catastrophe under the terms of the box rental agreement. This no-liability policy is clearly stated in the rental agreement, yet many people do not take the time to read their contracts,” he points out.

“The FDIC insures customer deposits up to $250,000, but does not cover cash or any other valuables in a safe deposit box. Unless you purchase a separate rider requiring an appraisal and proof of ownership, Homeowners Insurance will offer some limited coverage — usually up to $1,000 — and typically will not insure cash or precious metals. Flood is generally excluded from coverage.”

In April, 2015 Chase bank informed customers they were “Not to store money, coin or currency unless it is of a collectible nature.” Suzanne Alexander, Chase spokesperson, stated, “We made the change because it is safer and more convenient to keep your money in a bank account, as it can accessed 24 hours a day at an ATM and is insured by the FDIC.”

We would just love to see how Chase plans on enforcing this prohibition unless their staff has X-ray vision.

Most lawyers advise keeping some cash in a safe deposit box for emergency purposes—or perhaps unused foreign currency from a trip. Pluard agrees, pointing out, “There is no federal or state law prohibiting cash in a safe deposit box. The bank’s rental agreement may frown on it, but they do not know what you are keeping in there.”

Can employees go into your box anytime they wish? Pluard answers, “No. Because the bank’s guard key is only able to open a box in conjunction with the renter’s key, employees cannot access the contents without your key.

In the years of our Great Recession, close to 500 banks failed across the country and were taken over by the FDIC. Their assets — including safe deposit boxes — were transferred to other institutions. “For people who had not visited their box for a long time — or kept the bank aware of how to contact them — this caused real nightmares,” he observes.

It is essential that a signer on the box visit the bank — and go into the box — at least twice a year. To not do so is a serious mistake for two reasons:

1. They need to have a current point of contact. If you move, let both “sides” of the bank know, as the box renter information system is almost always independent from the deposit accounting data base. You cannot be certain that a change of address for your deposit account will carry over to the box records, resulting in box customers simply “lost.”

After a period of time — which varies with each state — the contents will be sent to the state as “unclaimed property.” California keeps it forever — able to be recovered by owners or heirs — while some other states transfer the value into their general funds after only three years.

2. The best way to protect yourself is by visiting your box once every 6 months. With a smart phone, take a picture of the contents as this becomes proof what was there the last time you opened it. Did someone enter it? Was it emptied? Your cell phone, date-stamped photo will be good proof.

Finally, Pluard recommends, “Making sure there is a second person identified on the rental agreement and card who has signature authority so they can get in event of your death or incapacity.”

Anyone who has a safe deposit box with contents of a considerable value can learn a great deal from the SDBIC website. It is at www.safedepositboxinsurance.com.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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If Southern California-based family nurse practitioner Joe Torres had read Fool me Once, by Kelly Richmond Pope, he and I would never have spoken. He also would not have lost thousands of dollars in an “overpayment” scam that began when he was with a patient and his laptop screen froze.

I’ll come back to Joe’s all-too-common story in a moment, but I would like to offer this suggestion if you are thinking about a gift for a high school or university graduate — really anyone who wants to learn how to protect their money.

Let that gift be one of the most useful books they could ever own. Fool me Once provides keys to avoid being taken by the con artists and thieves who roam the earth.

With elder financial abuse so prevalent, Fool me Once shows my older readers and their children the signs that mom or dad aren’t okay.

“Said they were from My Bank”

“I was at work,” Joe wrote, “using my laptop, seeing patients, when my screen froze and a message stated that it has a virus and to call a number. I did, and a man said he was with my bank and for $400 he can give me antiviral protection on my computer so I can use it. I sent the $400 using a credit card.

“Immediately, he showed my debit card number, said that I paid too much and he will send $200 back to my bank account. Since I never use the card, I thought he was an employee of my bank as he had the card’s number.

“Somehow $44,200 appeared in my account! He instructed me to wire him the extra money and if I do it right away, he would give me $70 and five years of antiviral protection.

“I was trying to be honest and I wired $43,930 the same day. The next day, I realized this was a scam So, I went to my bank’s closest branch and changed my debit card number.”

Joe Discovers No Safeguard from His Bank

Management at his bank said, “You owe us $44,200!”

“I never received an alert via text, email, or mail, of the movement of the money from my home equity line of credit to my bank account. This was not right, as I but never used it.

If I would have been alerted, I would have immediately canceled or not sent the wire.”

Overpayment scammers pressure the victim to “refund” money “mistakenly” placed in their account, but in reality, it isn’t there.

Merely because an account shows an amount of money deposited does not mean the funds are really there, as it could take days for deposits to actually clear and be fully credited. This is another tool scammers use to convince the victim that an overpayment was made.

Upon receiving Joe’s letter, I contacted an executive in the corporate office of his bank who promised to “escalate” his case.

Despite leaving voicemails for her, asking “Don’t you have some safeguard in place to stop suspicious wires — sending money overseas — from an account that never had activity, and explore the possibility of a scam with your customer?”

I am still waiting for a response.

Joe’s letter concluded, “They need to fix this problem. I want my money back. I should not have to pay for their mistake.”

He gave me permission to use his real name, as “I want people to realize how easily they can be swindled and you can’t trust your bank to prevent this known fraud from taking place.”

Bank executives Silent

Can financial institutions prevent money from being wired? You bet they can. And while it is beyond the scope of this story, they have an important role to prevent money laundering and must be alert to potential fraudulent transactions.

“When a wire transaction is outside of a customer’s profile, it should be stopped and the customer asked to come into the bank, if possible. That would appear to be the case with Joe,” said “Banker X,” from a business bank, in my town who asked that both she and her employer remain anonymous.

“We have prevented similar scams from succeeding, as our systems are designed to look for and alert us to unusual customer transactions,” she pointed out.

Interestingly, I ran these facts by press relations and bank officers at a number of banks across America, asking, “Do you have safeguards that would have stopped Joe’s wire from going through, giving time to investigate activity on an account that had never been used?”

Not one bank officer would comment and most never returned my calls. In law, their silence can be seen as an adoptive admission.

Investment Firms Have Safeguards

However, representatives of major investment houses said “Yes, we have algorithms that are looking for the kind of thing that Joe was doing — suddenly wiring over $40,000 from an account he never used before. Everything comes to a halt, and we talk with our customer to see if is legit, or if they are a scam victim.”

One explained, “These scams succeed due to a sense of trust, wanting to do the right thing, and pressure to act immediately. Had Joe taken a step back and actually gone to his bank before wiring the money, the crooks would have lost.”

So, what are Joe’s remedies? I ran this by several attorneys who sue banks, and all agreed that this is a non-starter. They recommended trying to find a tax deduction of some type.

To protect yourself from bank fraud and other scams, visit the Consumer Financial Protection Bureau (CFPB) and find more tips in the article Banking Scams: Beware Fraudsters Impersonating Your Bank.

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If you are a lawyer who handles real estate transactions, collection matters, contractual disputes, or divorce cases, today’s story could save you a huge amount of money, and an enormous amount of grief.

Recently a very interesting cashier’s check was delivered to my office via FedEx International Air Waybill.

It is payable to my law office in the amount of $382,261.76 and drawn on the Lindsay, Ontario, Canada, branch of Scotiabank, from “Battery Backup Power, Inc. Of Costa Mesa, California”

Odd. A California company using a Canadian bank? Hang on, as it gets even more interesting.

A memo is attached to the check, stating, “Reference your client Shun Hing Electronic Trading Co. Ltd. We have sent this payment owed to avoid litigation brought against us.”

Instructions accompanying the check state, “Please deposit into your trust account, deduct your customary collection fee, and immediately remit the balance to us.”

But there are two problems: First, none of the named companies have ever been my clients and, second, the cashier’s check is counterfeit.

So, why have I been sent this cashier’s check and how do I know that it is a fake? 

Had lawyers across in the United States and Canada asked these very same questions, they would have saved themselves millions, that’s right, millions of dollars over the past several years.

The Anatomy of Debt Collection Fraud

Overseas scammers follow a sophisticated script, outlined by Lawyers’ Professional Indemnity Company of Toronto, Canada. They catalog frauds against lawyers, and their website is well worth any lawyer’s time. https://avoidaclaim.com/

“A lawyer is contacted [via email] to help an overseas business collect a commercial debt from a purported borrower in the lawyer’s jurisdiction, or facilitate the purchase of a large piece of commercial equipment or some other financial transaction. The fraudster provides documentation about the loan, sale of equipment, or whatever else is involved in the transaction. A retainer agreement may be signed, but instead of paying the retainer fee. the lawyer is sent a fake cashier’s check and told:

(1) To deposit it into their trust account and, after attorney fees are deducted, to wire the balance to an overseas account. The lawyer promptly complies with the request, and sends the money.

(2) But as the check is counterfeit, the lawyer’s trust account is left with a shortfall. His/her bank, when discovering that the check bounced, insists on being repaid, which they have the right to do.  (And then, the lawyer normally freaks out!)

“In this type of scam, “Lawyer’s Professional Indemnity points out, “the fraudster will often use the details of a real company, including web address, names of real employees and the mailing address. However, the contact phone number and email, will be fake.”

How Banking Law Makes It Easy to Scam The Attorney

You have probably noticed a small sign posted near your bank’s teller windows that states, “Funds will be available the next banking day in most instances.”  This is a key element that enables the scammer to successfully pull off the fraud, as there is a difference between funds from a check being “available” and the check having “cleared.”

When a bank confirms that funds are available, it means that the bank is providing provisional credit so that the funds may be withdrawn.  However, if the issuing bank does not honor the check–or if it is counterfeit–your bank can still reverse the transaction. 

Therefore, do not disburse funds until the money has been irrevocably deposited into your trust account, regardless of the apparent validity of the check or the bank showing the funds as available.  Advise clients at the start of the representation that they will not receive any payment until the check has cleared and that this will take time. 

With overseas checks, it can take months before notice of a rejection is forwarded.

Red Flags

So, what are the signs that you have been targeted?

(1) Receipt of an unsolicited email from an overseas company you know nothing about;

(2) Fees offered are disproportionate to the work being performed;

(3) The matter involves a hassle-free collection job; there seems to be no need for attorney involvement or for funds to be routed through a trust account.

Does My Malpractice or Office Commercial Insurance Policy Protect me?

Lawyers who have been burned in these schemes across North America have made claims under their professional liability and office commercial insurance policies with mixed results. In general, mal-practice carriers will furiously defend against such claims. As limits of coverage are generally low under an office commercial policy, many carriers will pay their maximum.

So, when an out of the country “client” contacts you, prudence should call for great caution.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.

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