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WaMu Gave Grandma's Money to Crooks

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New York Times Reporting on ICT

The article appeared on May 21, 2007.

click here for more info

Wednesday, March 08, 2006
Letter to Fay L. Chapman, Senior Executive Vice President and General Counsel (unreformatted version)
Pasting this from Word -- haven't reformatted it for the web yet.

This might be considered the Long Version of what happened:

Fay L. Chapman
Senior Executive Vice President and General Counsel
Washington Mutual, Inc.
1201 Third Avenue, WMT 1501
Seattle, WA 98101

Forgery Department
Washington Mutual, Inc.
PO Box 201079, STA2FOR
Stockton, CA 95290

Re: My Grandmother, Case #200602xxxxx


Dear Ms. Chapman,

I'd like to share with you details of a fraud against my grandmother's Washington Mutual checking account. It resulted in her losing nearly $700 (about half her account balance) and led her to close her account and discontinue her business with Washington Mutual. I have spoken with representatives of Washington Mutual (WM) on your customer support phone line. I received incomplete and unsatisfactory answers to questions I raised about this incident. I was instructed to write this letter.

I am writing this letter as:

1. a concerned grandson
2. a Washington Mutual personal checking account holder myself
3. someone who would really like to see the type of people who victimized my grandmother and evidently make a career doing this put out of business

My grandmother is a responsible, independent, well-read 80 year-old widow. She still attends extension classes at her local university and is not a fool. She is not poor but lives in subsidized housing on fixed income. Her one failing: she was too polite to hang up on a phone solicitor and too trusting to recognize a scam in the making. After vainly filing a fraud claim with your Forgery Department, she closed her account and wisely decided to put this behind her as much as possible. It gives her a headache and, happily, she has better things to do with her time. Believe when I say I do as well. But she has given me her blessing in pursuing this matter and I have taken it up as a matter of civic responsibility if nothing else.

I have addressed this to you because I expect it will hold some special interest for you as an executive and general counsel for Washington Mutual or at least for someone who reports directly to you. I have also addressed it to Washington Mutual’s Forgery Department as advised, though I don’t have much confidence in the attention or helpfulness of this department for reasons explained below.

This is what happened, as best I can gather based on phone calls to representatives of the scammers, communications with Washington Mutual customer support, and conversations with my grandmother:

1. In December, she was phoned multiple times by men who possessed her account number and offered to credit her account in return for her cooperation in some kind of vague financial transaction. She admitted that it sounded “hokey,” but did not recognize it as a scam to defraud her account. She never wrote a check to them, never agreed to purchase anything, and never authorized them to withdraw funds from her account.

2. On December 22, Identity Theft Protection (ITP) printed a check in her name for the amount of $398. Though it was printed with her name, her (incomplete) street address, her account information, and Washington Mutual's name, it was not a check from her checkbook, she did not sign it, and it was cashed in Cleveland, OH, on the other side of the country. On December 28, WM processed the check and transferred the funds from her account.

3. The fraudulent transaction came to her attention at the end of January when she received her next statement from WM. She did not recognize the transaction and immediately phoned WM to report the unauthorized withdrawal. Around the same time, she received a package from a company named Identity Theft Protection in Las Vegas, NV. It contained generic brochures on identity theft and some miscellaneous junk mail. Apparently, this was the service or product the "merchants" presumed to offer my grandmother in return for her $398.

4. On February 14, the WM forgery department sent her an unsigned form letter stating that because the “merchant(s) in question voice-recorded the authorization for the transaction(s) in question,” her claim for reimbursement had been rejected. The letter went on to state, “In order to minimize the risk of future losses from against your compromised account, your account is scheduled to be closed with 15 business days from the date of this letter.” Because her social security checks must be directly deposited to an active account, she closed her account and opened a new one at a different bank with the assistance of her son and daughter (my mom) the following week.

5. Meanwhile, on February 7, after my grandmother had first reported the unauthorized withdrawal, WM honored another check for $299. Although the check was made out to a different company, the check otherwise looked identical to the first.

6. In recent days, I have contacted on several occasions a phone number listed on the first check. The number belongs to Client Care Relations, a Canadian firm that, according to agents with the company I have spoken to, represents over 60 firms. They would not give me any information on the company Identity Theft Protection that forged the check in my grandmother's name, but instructed me to send back the materials my grandmother had received by certified mail then call them back a week later with the receipt number and they would begin processing a refund with ITP. I am in the process of doing this. In phoning them, I also requested to hear the recorded authorization for the transaction. It was played for me and I maintain serious doubts about its authenticity. Client Care Relations claimed to have no knowledge of the second check and attempts to contact the number listed on the check end up in an anonymous voicemail box that is full and accepting no new messages.

7. Last week, I phoned Washington Mutual with my grandmother on the line to follow up on this matter. Before calling, I had drawn up a summary of events (like this one but much briefer) and questions regarding WM's policies and practice in handling my grandmother's account during these events. I spoke to two people who were unable to provide specific answers to my questions before being transferred to Jose Portilla who identified himself as a manager in the Forgery Department. He reiterated that my grandmother's forgery claim had been reviewed, rejected, and closed, and recommended I write this letter.

Listed below are the questions I wrote out before calling WM customer support and a summary of the responses I received:

1. These checks were not signed by my grandmother, did not originate from her checkbook or Washington Mutual, and were unlike any checks that have ever been written against her account before. Why did Washington Mutual honor them? What legitimate purpose could they possibly serve?

I never received a sensible answer to this question. I was informed that WM processed a number of these kinds of checks and they were processed automatically. The automatic acceptance of these checks seems to present a massive security risk for WM checking account holders.


2. What is the maximum amount for which Washington Mutual will automatically process with no additional security precautions?

I was told that there is no limit, only the funds available within the account. This surprised me.


3. How did Washington Mutual conduct their fraud investigation? What company did they contact? To whom did they speak?

The WM representative I spoke to could provide no details of how the investigation was conducted. The letter my grandmother received from WM's Forgery Department indicated only that the merchant possessed a voice recording authorizing the withdrawal and reprinted the phone number listed on the check.


4. The letter from WM's Fraud Department referred to a voice-recorded authorization. I have heard this recording. It sounded as though it had been both recorded out of context and doctored. How did WM's Fraud Department verify the authenticity of the recording?

WM reps could not answer this question and refused to allow me to speak to anyone in the department who might be able to answer it. Rather, both the phone agent Akiva and her manager Jose Portilla asked whether my grandmother had said her account number in the recording. I said that she had, but noted that she had not authorized the transaction. Both maintained that this was sufficient authorization. I reframed the question for Mr. Portilla:

5. Is it then the case that any merchant or criminal that records my grandmother saying her account number can print a check in her name and withdraw funds from her account in any amount?

He agreed that this was the case. I remain astounded. Mr. Portilla said at this point he could be of no further assistance and advised me to restate my concerns in writing.


From this interaction, I concluded the following:

1. Anyone can print up a check on my account in the way that these scammers did and Washington Mutual will process it and transfer the money from my account to theirs. The information required is public information and readily available -- anyone to whom I've written a check or who has served in the processing of that check necessarily has access to it. Because Washington Mutual accepts these dubious third-party checks, it is powerless to stop fraudulent checks in process.

2. If, after the fact, the scammers, con-men, or criminals can produce a recording in which I say my account number, regardless of the context, Washington Mutual will absolve itself of all responsibility for its role in the fraud by claiming that I “compromised my own account.”



Please correct me if I am wrong in any of these particulars. This however is the direct conclusion I drew from the very specific questions and concerns I raised with Washington Mutual support staff as they related to the forgery involving my grandmother.

As a Washington Mutual personal checking account holder myself, these revelations concern me immensely. Furthermore, Washington Mutual's apparent indifference in accepting suspicious checks and laxity in investigating claims of fraud strike me as the critical weakness in a system that appears to grossly benefit unscrupulous merchants and criminals who prey on senior citizens.

I feel compelled to add, as a final point, that having had to deal with customer service staff for both your company and representatives for the company that actively defrauded my grandmother, the latter proved on the whole more professional in tone and cooperative in nature. Despite my frustration with WM's actions, I made it a point to remain polite and civil through my conversation with your staff. The courtesy was not always returned.

Additionally, I found the process of navigating WM’s bureaucracy extraordinarily aggravating. My grandmother and I were transferred twice, with delays at each step. To finally be transferred to Jose Portilla required my grandmother and I to wait on hold for 15 minutes, without any warning of how long the wait would be or updates on when he would available to take our call. Perhaps this was a phone room vigilante's simple vindictiveness. But then when my grandmother and mom went to my grandmother's local branch to close her account, they had to wait a half-hour while one of your branch managers waited on hold on the phone herself for one of WM's own departments to unfreeze the account so that it might be closed. If this is not maverick pettiness of a few rogue employees within your company, you really need to give some attention to improving your internal organization.

While such service has not been my general experience as an account holder with your institution over the last several years, the exception in this case is almost strong enough to wipe out the effect of all the positive service I've experienced, not to mention all the Washington Mutual commercials I've seen, during that time.

I hope you or someone at Washington Mutual will be able to address in reasonable detail the questions and concerns about Washington Mutual check policy and account security that I have raised here. Mr. Portilla told me that it might require as much as 30 days for a response, but that I could expect a personal response. Considering the time and energy I have invested in this matter, I hope I may see a speedier reply. In any event, I hope my efforts will be of some service to both your institution and your account holders generally.

Sincerely,
wamuonfraud@gmail.com

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comments:

We just had the same scam on our older mother as well. The check was not even drawn on her bank. She did not sign it at all. And still the funds were drawn out of her account non the less. We too are working on these scumbags. I wonder where they physically are located?

tgreenw900@yahoo.com
I received a phone call from my ederly mother yesterday about this same scam. The company is called CPS Midtrust Benefits. They conned my mother into verifying her account information. The amount was $398.00. Her bank, Bremer Bank in Watertown MN, will not do anything. I listend to the audio tape and it seems very choppy and out of context.

Capital Payment Systems was no help saying they only deal with billing.

This whole issue is a huge fraud scam that preys on the elderly. Any help would be appreciated.

tcassem@hotmail.com
My 89 yr old mother received a "phone call" from her bank re: a $300 or more check being processed. She states she told them she knew nothing about it as her daughter(me) handles her business affairs. I called her bank and they assured me no such call had been made nor a check of $300 or more was being processed. This was on a friday. On the following monday I checked her account on the web and YEP a weird looking check for $399 practically wiped out her account. I called the first number which belong to Banc-Tech in Texas who stated they simply worked for the telemarketing company who possessed the account information - and the telemarketer would have a recording of such sale. I called them several times and the system "was down" so I could not hear the recording. I asked the man to cancel the sale which was a medical insurance packet of some sort - he stated after receiving the materials I could cancel it in writing. What a laugh. My bank "almost" assured me that they'd credit the account but I'm not certain they will. My mother would not know how to find her routing or checking account number - she'd only be able to read straight across the bottem and she says SHE DOES NOT REMEMBER doing that. I had purchases a home alarm system for her in case she fell, etc. and given a void check to the company for purposes of electronically taking payments from the account. I immediately cancelled the account - e-mailed, called that alarm company and they were rude and insisted I had to give them checking account info for payment purposes and I told them I wanted billed. I called their main company and they agreed to such (so far).

I'm assuming since mainly old, frail people use those alarm alert systems that someone in that company is selling check information to CROOKS - I can't believe banks accept such checks. Oh and my bank told me they could not verify a check being processed without an exact amount - BUT WHEN I CALLED after my mom told me about the incident - the person I talked with did not TELL ME I NEEDED THE EXACT AMOUNT TO CHECK ANYTHING. I feel most banks are in on the scam with the telemarketers !!

I want the $399 back and will go to our banking commission and contact the Feds anyway once that part is settled. This is terrifying as people write checks daily to pay bills and ANYONE of those businesses can take money from your checking account without permission? golly neds.

Brenda Elkins
West Virginia
Update

I'm happy to say that Bank Tech did refund the monies that were taken from this checking account and debited the account of their client (the insurance company (scum) who would not answer my calls - sure started calling me as I got my money back so I laughed at them !!

Legislators passed some type of law re: banks accepting area remote checks that needs TO BE STOPPED - millions of unspecting people of getting robbed daily.

Brenda Elkins
Thank you for publishing this information on the Internet. The Internet = Freedom of Information.
WAMU’s merchant account scam has been holding my two companies hostage and depriving me of the right to earn a living for almost a year now. My case against them is pending with the courts and because of this non-sense my landlord took me to court to because I owe him money that he no longer wants to wait for. This is the last straw so I am not worried about it because God is in control of the situation. What was meant to harm me will ultimately turn out to be a blessing. The Landlord hired a pit-bull lawyer to make the case and put me on the street....but little do they know that they put me on speed-dial to something bigger and much better. I am ready to move out of Death Valley by the Grace of God.
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