Having a checking account is a privilege, not a right, but most people forget about it until they lose access to their accounts.
The security software that banks use to detect criminal activity is easily spooked. It sets off millions of alarms across the industry every year, and most of them are false.
However, bank staff members who follow the warnings appear to be locking an increasing number of innocent customers out of their accounts, The New York Times reported in a series of recent articles. They close checking and credit card accounts in part to keep out regulators, who are concerned about money laundering and other criminal activity.
Closures often occur without warning and chaos ensues when people lose access to their money for weeks and are unable to pay their bills.
If you want to prevent this from happening to you, it is helpful to prevent your account activity from looking like that of a criminal.
Much of the advice they follow comes from banking experts who did not want to be identified for fear of offending their employers, but who spoke anonymously because they are tired of their institutions driving out so many innocent customers. Keep the tips in mind and you can avoid getting swept up in any future raids.
The anatomy of a typical checking account
Put yourself in the shoes of your bank’s fraud analysts. If you’re not a local credit union or a single-branch community bank, they have no idea who you are. They often work on a kind of assembly line, where they must meet a daily quota of alerts that must be adjudicated. Often the indications come directly from the surveillance software that banks use to monitor your transactions.
So how are you going to make it easier for those people to mark you, the innocent one, as someone they shouldn’t mess with?
In a perfect world, your checking account balance looks like the teeth of a saw. A lump sum of income appears on a regular basis, you spend it over a period of weeks, and then the same amount appears repeatedly. Ideally, the money comes from a direct deposit from an employer that bank employees can look up in 10 seconds if they’ve never heard of it.
Many people don’t have orderly and orderly financial lives, but algorithms have no sympathy or empathy. If your life is a bit messy, try to maintain some kind of pattern with your transactions, especially if you tend to make or receive large payments with different parties or transfer large amounts of money to and from external accounts.
This extends to the time you open a new checking account in the first place. Often, people open an account with a large deposit. While this isn’t necessarily suspicious on its own, if another red flag arises, like the ones in this article or if you work for a cannabis company or have any type of arrest record, the bank may cancel your account within a few days to open it. . This has happened several times to Times readers, more than 1,000 of whom have submitted their stories.
Checks are a warning sign
Fraud related to mail and check theft has nearly doubled in recent years. As criminals have focused on checks, banks have ramped up their check fraud algorithms.
One way to avoid problems is to avoid becoming a victim of check fraud in the first place, so that the bank doesn’t think you’re suspicious when you later file a claim for money that a thief has stolen. If you don’t write any checks (and destroy or hide the ones the bank sends you), fraud becomes more unlikely.
If you must use checks, do not mail them. And if you have to mail a check, try taking it directly to a post office. Residential mailboxes and even blue post office collection boxes are most vulnerable to theft, where thieves may attempt to delete amounts or recipient names on a particular check and then redirect a much larger sum to someone else. And try not to accept checks from people you don’t know, in case they try to scam you.
Avoid generating suspicious transactions
If you want to think like bankers, consider the types of suspicious activity that the American Bankers Association outlines in its course for industry professionals.
Many security obstacles have to do with cash and how it is used. For example, a federal law requires bank customers to complete a form when depositing or withdrawing $10,000 or more in cash. Many depositors do not know the rule and do not like to be informed on the spot by a bank employee.
From the ABA course materials: “A typical example of a suspicious transaction for a teller would occur when a customer begins making a currency transaction that exceeds $10,000 but then reduces the transaction amount to less than $10,000” when the bank tells inform that person about the form requirement.
Do not do this. Simply fill out the form, which won’t hurt you if you don’t break any laws.
Also on the list of things not to do is making a bunch of cash deposits at ATMs, for example, after a shift waiting tables at a cash-only restaurant. For you, this is simply safety first. To the bank, it’s one of many signs that someone might be a drug dealer. Making four-figure deposits at different bank branches in a region could raise similar suspicions.
Large cash movements (whether deposits or withdrawals) could also create problems. Imagine you’re a fraud investigator and you come to work one day to find an alert about a semi-dormant savings account that received a $30,000 deposit eight weeks ago. In addition, three cash withdrawals worth $10,000 have been made in the last six weeks, one of them every two weeks.
For you, this might be selling some stocks to pay for the cash purchase of a used car for each of your teenage twins, plus $10,000 to pay a carpenter who doesn’t like checks. For the analyst, the trading pattern is completely off base.
Call your bank and call them back
It can be helpful to be both proactive and reactive.
If you’re selling your home and six-figure amounts of money are about to start flowing, let your bank know. If you sell your car for cash and deposit the money, tell your bank. If your life is about to change (a move, a big change in how and when you earn money, a six-month trip to retire), let your bank know.
When JPMorgan Chase closed the personal accounts of Bryan Delaney and his wife, and another of a bar they own in New York City, it carefully interviewed new institutions. Chase had pointed to a pattern of cash deposits as cause for his concern.
“I told them Chase had a problem with us being a cash business and I wanted to make sure we were in full compliance,” he said. “So I told them, ‘I’m going to write down how we do what we do, how and when we make deposits,’ and I gave them old statements so it would all be on the record.”
Relationships can help, sometimes, when alarm bells go off. Build them with a bank branch when you open an account at a bank that has branches and take care of them on an ongoing basis. “The more you do in person, the better your chances of at least someone standing up for you,” said Aaron Ansari, a former bank programmer.
When the bank calls you, answer the phone. If you don’t trust it to be the bank, call the number on the back of your credit or debit card and ask to be connected to whatever department was supposedly contacting you.
Open the email and reply. If the communication seems suspicious, log into your account and send a secure message or call a number listed on the bank’s website to confirm that the inquiries are real.
Banks must follow so-called “know your customer” rules. And while you may not like it if they suddenly want to receive payment receipts or other information from you, if you don’t comply, they may show you the door. Suspicious activity, according to the ABA course on the topic for bank employees, includes “customers who are reluctant to provide personal information or information about their business.”
Any confrontation could result in the bank filing what is known as a suspicious activity report with the federal government. Too many of them, or even one, can lead the bank to close your accounts.
If it happens to you
When banks close accounts, they generally don’t email, text, or call you. Instead, he receives an old letter in the mail. You open your email every day, right?
Otherwise, you’ll likely find out about the closure when your credit or debit card stops working. You will call the bank, they will inform you of the closure, and the representative, who will not know the exact reasons, will tell you that you can expect to receive your money by check in a few weeks.
If you can’t go weeks without money, your next step might be to go to a branch, if your bank has one, to try to withdraw everything.
Don’t scream when you get there. Making a scene rarely helps your cause and could cause the bank to call the police. However, crying could move the needle. If you can get your money back after all, you might also want to empty any safe deposit boxes while you’re there.
Then there’s the approach Elad Nehorai took at a Bank of America branch in Los Angeles in July. He and his wife had their trading account closed when he reported attempted fraud to the FBI. According to the bank, he sometimes restricts accounts due to information he receives from law enforcement agencies.
Mr Nehorai went to the branch and was taken aback by the staff’s response. “There was something very systematic about the whole thing,” he said. “It was clear that it was not his job to know what to do in this situation.”
In the end, he and his wife decided to sit tight until the bank released the account balance. At the same time, he posted on Twitter about the confrontation and a local CBS journalist became interested.
After the situation reached that point, Bank of America disbursed the funds.
Tara Siegel Bernard contributed reports.