Credit unions have a responsibility to safeguard their members against financial fraud. Nobody would dispute that. And as fraudsters – I was going to use the word evolve, but that connotes too slow a process. As fraudsters continue to revise, refine and update their nefarious tactics at breakneck speed, credit unions simply must keep up. I don’t think anyone would argue me on that, either.
In fact, I recently moderated a webinar with our friends at Bankjoy on this very topic. The webinar was titled Protecting Members, Preserving Trust: Modern Approaches to Fraud Prevention. You’re welcome to watch the replay, but the bottom line is this: The best fraud prevention and mitigation strategy is one that’s proactive rather than reactive. Put another way, no matter how futile it may sometimes seem, you have to stay one or two steps ahead of the bozos who are constantly trying to pick your members’ pockets.
The question then becomes, if the fraudsters are able to work their Svengali magic on one of your members despite all your best efforts, who should shoulder the blame? Is it your fault that your member fell for a scam? That’s a question a recently filed lawsuit seeks to answer, as detailed in an article I read on Yahoo! Finance titled NYC grandma, 86, loses $700K savings in scam — now she’s suing Bank of America, Merrill Lynch for negligence.
First a clarification. Grandma isn’t suing anybody. The family is suing on her behalf. The voice of this lawsuit is the woman’s nephew-in-law, who stated, “We are left with no choice but to bring this lawsuit, which we hope will bring real change to the banks’ policies and procedures, lessening the chances this will happen to others.” Note the use of the word we.
For me, this lawsuit fails the sniff test on a couple of points. First off, “according to a lawsuit filed against Merrill Lynch in Manhattan Supreme Court, the Upper East Side resident who suffers from age-related memory loss was persuaded to make a series of withdrawals over nine months.” Clearly Merrill had no prior knowledge of her mental state.
Second, the $700K in question was withdrawn over nine months from three different institutions: Merrill/BofA, TD Bank and Union Bank of Switzerland. It’s unclear whether “we” intend to sue these other two, as well.
Here’s the thing. I’m durable power of attorney for my 82-year-old aunt, a woman of modest means. And I can promise you that I know immediately if $10 looks out of place in her bank account. So where the hell were the niece and nephew-in-law and the rest of the family as the fraudsters waged their nine-month campaign of financial destruction? It boggles my mind.
Don’t get me wrong. I feel very sorry for this woman – sorry that she fell victim to these jackasses, and equally sorry that, at least based on the information in this article, her family doesn’t seem to have had her back. As much as it pains me to say so, I have to side with Bank of America on this one.
How about you?