Bank denies theft due to date expiration of claim

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mtjoseph

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My jurisdiction is: San Francisco, CA

I recently was told by a representative from WAMU, now CHASE, the $3857 stolen from my business account through fraudulent means can not be recovered due to the claim being filed outside the 30 day reporting period requirement. In truth, I reported the error some 9 months after the fact during an audit by my accountant. I am not arguing the correctness or fairness of the 30 day policy. My questions from a legal perspective are about the bank's responsibility to prevent fraudulent activities and a customer's expectation of that standard.

Here are the sequence of steps which occurred.

  • I noticed problem transaction
  • I asked Customer Service for copy of check to verify transaction
  • Received copy of check via mail
  • I confirmed fraudulent check based on the following facts: duplicate check #, forged signature; unknown payee written to PO Box
  • I notified WAMU; case is opened
  • WAMU notified us we are outside 30 day window regarding fraudulent activity claim period of 30 days
  • I ask for detailed information about how, when, and where the transaction was completed. I am informed by Customer Service no more information is available due to "closed" status of case
  • I again followed up with Customer Service to inquire about the details for the fraudulent activity; clearly stating my interest is in preventing future fraudulent transactions. At this point, I am again told the case is closed and no further explanation is provided.
  • I call my local bank representative (who opened the account) for assistance. During a face-to-face meeting I am finally given a complete explanation as to the details of the fraudulent transaction.

    A Washington Mutual bank teller at the Southland-Hayward, California location cashed a check well over the permissible limit without following check cashing guidelines -even though the check was written to a person with a PO address, an amount exceeding the $1000 limit requiring supervisor approval, and without proper signature.

  • I subsequently visit this branch where the crime occurred to understand why a Teller would cash a check for $3857.50 without doing any of the following:

    [*]Get direct approval from customer due to large amount of check
    [*]Fail to verify the signature on the check
    [*]Disburse cash directly to an individual that does not have a WAMU account
    [*]Disburse cash above the allowed payout limit by an individual teller
    [*]Flag the check as "suspect" given that it is written to a PO Box
  • The Branch Manager acknowledges the fraudulent activity and suggests I re-file another claim asking for reconsideration with the above facts taken into consideration.

It is clear from the event timeline above and actions taken by representative(s) of the WAMU bank, both directly and indirectly, that monies were transferred to unknown parties without my express permission and proper supervisorial approval. Due to this breach in protocol, I do not understand why a 30 day reporting policy can be used to deny my claim.

As I said, I am not arguing the correctness of the 30 day policy. Given the breach in protocol, can the bank and the specific representatives involved in processing the transaction be held legally responsible for the loss of funds? Does the customer have a right to expect a high standard of protection for the assets entrusted to a bank? If so, is it reasonable for the bank to deny my claim solely on the 30 day window expiration, particularly with consideration of the failure to comply with their internal safeguards and policies? Do they have any responsibility to the customer for the possible illegal actions of their employees?

I can honestly say I feel victimized twice. Once by the unknown perpetrator and also by WAMU (CHASE), which takes no responsibility in this case, for the absence of protective measures to prevent such an act from happening.

Regards,
mtjoseph
 
Have you ever gone into your bank branch to discuss this in person? This might not be simple but you may have to sue Chase in small claims court. I don't think it will go that far since the procedures were clearly violated and you discovered them within an actionable period of time. The 30 day policy is probably implemented so that a bank can have some remedy and also perhaps an attempt to limit their liability as prescribed by law. I don't know your agreement with the bank so I can't comment whether the negligence would be superior to the fraud, which I believe it would be (this is gross negligence, actually, IMHO.)

The challenge here is that the teller was WAMU and Chase might not be concerned with appearances because it wasn't their bank. I don't know. First speak to someone - that's the best way to start. Good luck.
 
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