Five Tips for Managing Your Checking Accounts and Safeguarding Your Funds from Unauthorized Transfers by Criminals

Consumers need to keep five tips in mind for managing their checking accounts and safeguarding their funds from unauthorized transfers by criminals, according to a new Federal Reserve Board publication.

Criminals may use a consumer's account information to create a demand draft (sometimes called a "remotely created check") drawn on the consumer's account, or to make an electronic transfer from the consumer's account.

The publication, available on the Board's website, offers consumers advice on how to protect and manage their accounts:

• Don't give your account number and bank routing information to anyone you don't know.
• Review your monthly statement.
• Notify your bank about any problems as soon as possible.
• If you don't have enough money in your account, don't write the check or authorize the debit.
• Know your rights under consumer protection laws.

This information is available on the Board's website at http://www.federalreserve.gov/pubs/checkingaccount/default.htm. A PDF (Portable Document Format) version is provided on the website so that consumer groups, financial institutions, and retailers can download and print copies for distribution to their clients and customers.  Print copies of the publication are also available from Publications Services, Mail Stop 127, Board of Governors of the Federal Reserve System, Washington, DC 20551.

Be an Informed Consumer

According to the Comptroller of the Currency John C. Dugan. "Informed consumers not only make better financial decisions, they can also better protect themselves against unfair, deceptive, and fraudulent practices, and that's good for consumers, good for national banks, and good for the economy."  OCC's Customer Assistance Group is available to answer questions from national bank customers from 8 a.m. to 8 p.m., Eastern Time, Monday-Friday, at 1-800-613-6743, or by e-mailing Customer.Assistance@occ.treas.gov.

Consumer Resources and Links

• Avoiding Cashier's Check Fraud The OCC recently issued this advisory to help consumers watch out for scams involving cashier's checks.

• Combating Abusive Lending The OCC ensures fair and equal access to financial services. This collection of material highlights some of the ways the agency fights abusive lending.

• Gift Cards: OCC Provides Holiday Tips for Consumers Gift cards are growing in popularity, but consumers should read the fine print to understand all of the applicable fees and terms to get the most out of their gift card purchases.

• Home Equity Loans: Putting Your Home on the Line Is Risky Business Home equity loans can provide cash for a variety of reasons, but they also strip the equity in your investment. This online brochure outlines the risks and what you should look for in these types of loans.

• National Consumer Protection Week Site The homepage of National Consumer Protection Week provides a collection of resources and information from federal agencies to help consumers to be better informed.

• OCC Anti-Fraud Resources The OCC provides variety of resources to help you fight fraud.

• OCC Consumer Advisories The OCC recently began a new series of issuances called Consumer Advisories to help keep consumers aware of trends and practices.

• OCC Customer Assistance Group The OCC's Customer Assistance Group helps national bank customers with questions or complaints about their financial institution. CAG's toll-free number is 1-800-613-6743, and lines are open Monday through Friday, 8 a.m. to 8 p.m., Eastern Time.

• OCC Fighting Identity Theft OCC provides an extensive list of resources that consumers can use to protect themselves against identity theft. The Federal Government's identity theft hotline and tips for how to report identity theft are available from the Federal Trade Commission's Web site.

• Protect Yourself Against Phishing OCC's online pamphlet on protecting yourself from phishing gives practical advice on safeguarding your personal information.

• Protecting Yourself Against Overdraft and Bounced-Check Fees Overdraft and bounced-check fees can add up fast. This brochure offers tips for avoiding fees and understanding your alternatives.

• U.S. Postal Inspection Service Alert: Advance Fee Loan Schemes This alert advises consumers to watch out for scams asking for money to be wired in advance of closing on a loan.

• Writing a Check: Understanding Your Rights Do you know your rights when you write a check? This pamphlet from the OCC provides the basics.

Sign Up For OCC News and Information by E-mail

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FTC NATIONWIDE ID THEFT EDUCATION CAMPAIGN
"AvoID Theft: Deter, Detect, Defend"

You can take steps to minimize your risk of becoming a victim of identity theft. That is the message of a nationwide education program launched today by the Federal Trade Commission:“AvoID Theft: Deter, Detect, Defend.”

•    Deter – Take steps to reduce your risk of ID theft
•    Detect – Monitor your personal information
•    Defend – Act quickly when you suspect identity theft

The program coincides with issuance of an executive order signed by President Bush, creating an Identity Theft Task Force, chaired by Attorney General Alberto R. Gonzales and co-chaired by FTC Chairman Deborah Platt Majoras. The Task Force will develop a strategic plan to enhance the effectiveness and efficiency of government efforts to deter, prevent, detect, investigate, and prosecute identity theft.   “Personal information is the new currency,” said Chairman Majoras. “Consumers should protect their personal information as carefully as they protect their cash.”
The FTC and the Justice Department will send “AvoID Theft: Deter, Detect, Defend” education kits to 4,500 victim advocates across the country. The U.S. Social Security Administration will involve its field offices. Other partners include the National Association of Realtors, the American College Personnel Association – College Student Educators International, the National Association of Student Personnel Administrators, the National Crime Prevention Council, the National Apartment Association, and America’s Community Bankers.

The FTC maintains the central federal database for ID theft complaints. With experts in ID theft, privacy, and data security, its Division of Privacy and Identity Protection helps criminal law enforcement detect and prosecute identity thieves, and provides victim assistance and consumer education. The agency also pursues law enforcement actions against companies that fail to provide reasonable security for sensitive customer data. Since 2001, the FTC has brought 13 such cases, and challenges organizations that make deceptive claims about privacy procedures and security.

Materials in the “AvoID Theft: Deter, Detect, Defend” education kit include a victim recovery guide, “Take Charge: Fighting Back Against Identity Theft. The kit also contains a training booklet, “Talking About Identity Theft: A How-To Guide,” and a 10-minute video on identity theft. All materials are available in English and in Spanish. Through a toll-free number (1-877-IDTHEFT) and Web site (http://www.consumer.gov/idtheft/), the FTC has distributed more than 22 million publications on identity theft.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies in the U.S. and abroad.
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FDIC CONSUMER NEWS
A Special Guide for Seniors and Families
Frauds that Target the Elderly: Beware of Strangers
Bearing Gifts

Crooks posing as legitimate business people or other "trusted" individuals scheme to trick consumers into giving up money, property or valuable personal information

It's true – senior citizens are often the targets of fraud and financial crimes. Among the reasons: Some older people have built substantial assets (including their own home and large savings accounts), they're easy to find at home, and they can be swayed by fears of losing their financial independence. "Also, despite the efforts of law enforcement, criminals are getting smarter and using technology to their advantage to commit fraud and other financial crimes, such as identity theft," said Michael Benardo, manager of the FDIC's Financial Crimes Section.

The following are common cons designed to trick consumers – especially elderly people – into giving up money, property or valuable personal information. These scams often are committed by strangers posing as legitimate business people, government officials or other "trusted" individuals. (For a look at frauds committed by relatives or caregivers, see Inside Jobs: Elder Fraud by Relatives or Caregivers.) The information is based on reports from the U.S. Justice Department, FDIC fraud specialists, the Federal Trade Commission (FTC) and other sources:

Prize and Sweepstakes Frauds: This type of scam may involve a congratulatory phone call or letter informing a consumer that he or she has won a prize or a large sum of money in a lottery or sweepstakes. But before any "winnings" are delivered, you are told you must pay for fees, taxes, shipping and handling or other charges. Of course, the prize never comes or any products that do arrive are essentially worthless.

"Prize and sweepstakes fraud is more prevalent among older consumers than among the public at large, and is particularly prevalent among consumers age 70 and older," Lois Greisman, an Associate Director in the FTC's Bureau of Consumer Protection, said in testimony before the U.S. Senate Special Committee on Aging in July. She said nearly 12,000 older consumers complained to the FTC that they lost almost $35 million in fraudulent prize or sweepstakes promotions in 2004, with the median loss being about $2,000. "These frauds can be devastating to consumers who sometimes cash out retirement funds to claim their purported prizes," Greisman said.

Fraudulent Investments: A firm or individual "guarantees" fantastic returns on investments, business opportunities, gems and other "no-risk" deals. These will sound attractive compared to what local banks are paying on deposits. At some point the seller takes the money and runs, leaving the investor with a big loss.

Charitable Donation Scams: Crooks disguised as charities collect donations or money for raffles. While you think you're helping people in need, you're really helping con artists pad their pockets. You should make donations only to charities you are familiar with or after consulting with the Better Business Bureau (BBB), which maintains reports on national and local charities. Contact your local BBB as listed in the phone book or check out charities online at www.give.org.

Home or Auto Repair Scams: Someone calls or knocks at your door offering a super deal to fix your roof or driveway or repair your car. After you hand over the funds you discover the work hasn't been completed, is of poor quality or wasn't needed in the first place. Some scammers have billed consumers for maintenance or repairs that were never performed.

Loan or Mortgage Fraud: These typically involve unscrupulous "predatory" lenders (typically from the non-bank or home improvement industries) that use false or misleading sales tactics to make high-cost loans to consumers in need of cash, including older homeowners concerned about paying bills. Victims often can't afford the loan, and they may be pressured to refinance a loan repeatedly and pay high fees each time – a scam known as "loan flipping." Borrowers who pledge their house as collateral and can't repay the loan could lose the home in a foreclosure.

Help for Avoiding Foreclosures: The fraudster goes through records at the local courthouse listing homes facing foreclosure. He or she then contacts the homeowners and offers assistance to prevent the foreclosure from taking place. Instead, the homeowner is then tricked into signing documents that, in the fine print, transfer the ownership of the property to the fraudster.

"I-Need-Your-Help" Scams: Unlike the previous scams that involve selling or giving something to the victim, here the con artist is asking to receive some assistance... and in the process obtains account information or access to funds. Example: Someone claiming to be a bank examiner, bank security officer or police officer calls asking for help investigating a possible fraud by withdrawing cash from your bank account or providing account information. If the trick works, the bogus investigator can walk away with the money or use the confidential information to raid the victim's bank account.

Counterfeit Checks: In one example, you sell an item over the Internet and the buyer sends a cashier's check for more than the agreed-upon price. The buyer instructs you to wire the excess funds back. If you comply, you will most likely find out that the check you received is phony and the money you wired cannot be returned to you.

For advice on protecting against financial frauds, see FDIC's latest suggestions on its website at www.fdic.gov/consumers.
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Top Ten Safety Tips for Protecting
Personal Information

The Independent Bankers of Colorado and its member community banks offer this list of ten safety tips to help consumers protect personal information and avoid identity theft. Community banks constantly take measures to safeguard consumers’ personal information from unscrupulous people. But identity theft is a challenge every business and every consumer faces, and it is equally important for consumers to take precautions to help reduce their risk.

Check your credit report. The Fair Credit Reporting Act  requires each of the three national credit reporting companies to provide consumers with a free copy of their credit report once every 12 months (www.annualcreditreport.com).  If you bank or pay credit cards on-line, avoid passwords that include personal information, such as mother’s maiden name or date of birth.  Instead, use something unique that only you know.
 
Don't give out personal information over the phone, through the mail, or on the Internet unless you've initiated the contact and are sure you know who you're dealing with.  If you must share personal information, confirm that you are dealing with a legitimate organization.

Don’t use your Social Security Number on your driver’s license or other forms of identification.  Banks will not ask you to verify personal information over the phone or via email.  If you receive a phone call or email asking you to verify information, end the call, do not respond, and call the bank directly.

If you receive an e-mail asking for personal information, do not hit the reply button or click on any website link in the e-mail.  Instead, go directly to the sender's website by typing in the sender's website address. Protect your personal information. Don’t leave sensitive documents containing personal information where anyone can see it.

Use a shredder before disposing of personal records, especially financial records – preferably a cross-cut shredder (thieves have been known to paste together single-shred documents to obtain information).  When going on vacation, temporarily stop mail delivery; the U.S. Postal Service will hold mail for you.

Don’t use an automatic log-in feature on your computer.

The Independent Bankers of Colorado and its member community banks encourage consumers to follow these tips to safeguard personal data and help protect privacy. For more information, visit www.consumer.gov/idtheft or contact your community bank.
 

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COMMUNITY BANKS FIGHT IDENTITY FRAUD
AND IDENTITY THEFT

Community banks have embraced their role as leaders in their communities by developing proactive measures to combat identity theft.

According to a Federal Trade Commission (FTC) report issued January 22, 2004, identity theft accounted for 42% of the total 516,740,000 consumer complaints received by the FTC during 2003. Identity thieves struck their victims most frequently in the areas of credit fraud, phone or utility fraud, bank fraud (existing accounts, electronic funds transfer, new accounts), employment-related fraud, government document or benefit fraud, and loan fraud (business/personal and student loans, auto loans/leases, real estate loans).

The Independent Bankers of Colorado (IBC) applauds the continuing efforts of the Colorado General Assembly and Colorado's various federal, state, and local law enforcement authorities to combat identity theft.

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FBI CYBER CRIME INVESTIGATIONS

The FBI plays two very important roles in cyberspace. First, it is the lead law enforcement agency for investigating cyber attacks by foreign adversaries and terrorists. The potential damage to the United States’ national security from a cyber-based attack includes devastating interruptions of critical communications, transportation, and other services. Additionally, such attacks could be used to access and steal protected information and plans. The FBI also works to prevent criminals, sexual predators, and others intent on malicious destruction from using the Internet and on-line services to steal from, defraud, and otherwise victimize citizens, businesses, and communities.
The mission of the Cyber Division is to:

coordinate, supervise and facilitate the FBI's investigation of those federal violations in which the Internet, computer systems, or networks are exploited as the principal instruments or targets of terrorist organizations, foreign government sponsored intelligence operations, or criminal activity and for which the use of such systems is essential to that activity;

form and maintain public/private alliances in conjunction with enhanced education and training to maximize counterterrorism, counter-intelligence, and law enforcement cyber response capabilities; and

until such time as a final decision is made regarding the future role and location of the National Infrastructure Protection Center (NIPC), the FBI will direct and coordinate the Center's mission to protect the Nation's critical information infrastructure and other key assets.

The FBI’s Cyber Program website includes information on:
Cyber Investigations, Operation Websnare, Online Fraud Statistics, Anti-Piracy Warning Seal Information, Peer-to-Peer Network Risks, File a Complaint, Online Child Pornography Program, National Center for issing and Exploited Children, Parent's Guide to Internet Safety, New E-Scams & Warnings, How to Avoid Common Internet Frauds, and Cyber Stories.

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CONSUMER IMPACT

According to the FTC report, the median loss to a consumer in an identity theft case is $228. The average loss is $1,868. Consumer victims spent approximately $5 billion as a result of identity theft in 2002.

Victims may have to pay nearly $1,000 to clear up their credit reporting accounts following an instance of identity theft. (Identity Theft Resource Center)

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BUSINESSES PAY, TOO

According to a study by Meridien, identity fraud can cost up to $18,000 per incident to businesses, often banks, other financial services and retailers.

Businesses lost nearly $50 billion as a result of identity fraud and theft in 2002, according to the FTC.

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COMMUNITY BANK EFFORTS

Independent banks have taken a leadership role in promoting public policies aimed at protecting consumers and the financial services industry from identify fraud and theft. In 2001, we advocated introduction of a bill in the Colorado General Assembly to implement facial recognition technology to prevent identity thieves from obtaining a drivers license in someone else's name. In addition, we worked diligently to support implementation of other security features for driver's licenses and other forms of identification to combat card counterfeiting.

Community banks provide advice to customers on how to protect personal information through lobby displays/materials, notices accompanying monthly statements, newsletters, website material and seminars. In addition, community banks provide sources of information to customers on how to repair their personal information if they have already fallen victim to identity theft.

The financial services industry and vendors, trade associations, and regulators have already spent hundreds of millions of dollars on software, internal procedures, manuals, training and more to protect customers and the industry from the growing problem of identity fraud and identity theft. And we will continue to do so.

Community banks are committed to doing their part to prevent identity theft, and part of that responsibility includes educating consumers on the vitally important, proactive role that each individual should employ to protect their personal finances. The FTC report indicated that 60% of victims in identity theft cases do not notify a police department. In all cases of known or suspected consumer fraud and identity theft, a consumer should file a report with the local police department in the community where the occurrence took place, and file a complaint with the FTC by calling the FTC Identity Theft Hotline toll free at 1.877.438.IDTHEFT (4338); TDD 1.202.326.2502; write Identity Theft Clearinghouse, FTC, 600 Pennsylvania Avenue, NW, Washington, DC 20580; or visit www.consumer.gov/idtheft.

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PROTECT YOURSELF AGAINST SCAMS AND IDENTITY THEFT
Get Informed! Stay Informed!

The following are just a few official web sites that provide up-to-date consumer protection information on identity theft, financial and investments scams, and other economic crimes against consumers and businesses. These sites provide numerous consumer tips on how to protect your personal information and combat identity theft and what to do if your are victimized.

Federal Trade Commission - www.ftc.gov/consumer

Internet Fraud Complaint Center/FBI - www1.ifccfbi.gov/strategy/nls.asp

The Federal Reserve Board - www.federalreserve.gov/consumers.htm

FDIC - www.fdic.gov/consumers/consumer/news

Colorado Attorney General - www.ago.state.co.us

Colorado Division of Securities - www.dora.state.co.us/securities

North American Securities Administrators Association - www.nasaa.org

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IDENTITY THEFT: THE DETAILS

Credit Cards. In most cases, the Truth in Lending Act limits consumer victim liability to $50 per card for unauthorized credit card charges. The Fair Credit Billing Act establishes procedures for resolving billing errors on credit card accounts-including fraudulent charges. Consumer victims must write to the creditor (not the bank) within 60 days from when the first bill containing the fraudulent charge was mailed to the consumer victim. If the address on the consumer victim's account was changed by an identity thief and the consumer victim never received the bill, the dispute letter must reach the creditor within 60 days of when the bill would have been mailed to the consumer victim. This is why consumers must keep track of their billing statements and immediately follow up when there are errors or bills do not arrive on time. A consumer whose credit card information has been stolen or compromised must close the account and establish a new account.

ATM and Debit Cards. The Electronic Fund Transfer Act provides consumer victims protections for transactions involving an ATM or debit card or any other electronic way to debit or credit an account. It also limits the liability of a consumer victim for unauthorized electronic fund transfers. A consumer victim must report a lost or stolen ATM and debit cards immediately because the amount for which they can be held responsible depends on how quickly they report the loss. If a consumer victim reports an ATM card lost or stolen within two business days of discovering the loss or theft, the consumer's losses are limited to $50. If the consumer reports the ATM card lost or stolen after two business days, but within 60 days after a statement showing an unauthorized electronic fund transfer, the consumer can be liable for up to $500 of what a thief withdraws. If the consumer waits more than 60 days, the consumer could lose all the money that was taken from the consumer's account from the end of the 60 days to the time the consumer reported the card missing. To protect themselves in the event of an error or fraudulent transaction, a consumer should call the financial institution and follow-up in writing by certified letter, return receipt requested and to keep a copy of the letter. VISA and MasterCard voluntarily have agreed to limit consumers' liability for unauthorized use of their debit cards in most instances to $50 per card, no matter how much time has elapsed since the discovery of the loss or theft of the card. If the consumer's card has been stolen or otherwise compromised, the consumer must cancel the card and establish a new card and PIN.

Checks. If a consumer's checks have been stolen or misused, the consumer must close the account and the consumer's bank to notify the appropriate check verification service. There are no federal limits on a consumer's losses if someone steals their checks and forges their signature. Most states hold the bank responsible for losses from forged checks, but they also require consumers to take reasonable care of their accounts. For example, the consumer will be held responsible for the forgery if the consumer fails to notify the bank in a timely manner that a check was lost or stolen. Consumers should also contact the major check verification companies and ask that retailers that use their databases be notified to not accept their stolen checks.

Every state and federal financial services industry regulator also assists consumer victims if a financial institution does not help resolve bank-related identity theft problems, including problems with bank-issued credit cards. The majority of community banks in Colorado do not issue their own credit cards. Generally, credit cards are issued by large out of state financial institutions or retailers.

Credit Reports. The Fair Credit Reporting Act establishes procedures for consumers to correct mistakes on the consumers' credit report with the credit bureaus.

Credit Bureaus Contact Information

Equifax - www.equifax.com
To order your report call 1.800.685.1111
To report fraud call 1.800.525.6285
TDD 1.800.255.0056
P.O. Box 740241, Atlanta, GA 30374-0241

Experian - www.experian.com
To order your report call 1.888.EXPERIAN (397.3742)
To report fraud call 1.888.EXPERIAN (397.3742)
TDD 1.800.972.0322
P.O. Box 9532, Allen, TX 75013

TransUnion - www.transunion.com
To order your report call 1.800.888.4213
To report fraud call 1.800.680.7289
TDD 1.877.553.7803
Fax 1.714.447.6034
Email fvad@transunion.com
Fraud Victim Assistance Department P.O. Box 6790, Fullerton, CA 92634-6790

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FDIC Consumer News is now available at the following link: www.fdic.gov/

It features:

• Strategies and Help for Fighting ID Theft.
• New Consumer Rights to Their Credit Records.
• The Basics of Deposit Insurance for Businesses (and other entities, such as homeowner associations).
• New Financial Education from the FDIC.

Consumer education is the key in reducing identity theft. Gullible consumers are revealing personal financial information. Nobody wins the Canadian lottery without buying a ticket, the Nigerian pleas for help in transferring assets are laughable, and nobody, not even the federal or state government, a bank or a bank regulatory agency, will require consumers to reveal personal financial information, unless the consumer is initiating a financial transaction.