Complaint Review: Bank Of America - San Diego California

For a while I thought that Sec. 229.19 (c)(1) and 229.19 (c)(2)(ii) were loopholes for a bank to disregard holds on nonlocal (229.12 (c)(1)(i)) and large deposits (229.13 (b)) and then charge the customer's account if the check was returned. However The Uniform Commercial Code answers this question. Here's the specific code: UCC 4-214. RIGHT OF CHARGE-BACK OR REFUND; LIABILITY OF COLLECTING BANK; RETURN OF ITEM. (d) The right to charge back is not affected by: (2) failure by any bank to exercise ordinary care with respect to the item, but a bank so failing remains liable. In other words, nothing prohibits a bank from disregarding the availability schedules for nonlocal and large deposits and releasing funds prematurely, but given the circumstances, if a bank is found to have acted negligently, it is indeed liable. Furthermore, if a bank tries to use Sec. 229.19 as a "technical excuse" is is also liable for breach of the implied covenant of good faith and fair dealing, defined as follows: "A general assumption of the law of contracts, that people will act in good faith and deal fairly without breaking their word, using shifty means to avoid obligations or denying what the other party obviously understood. A lawsuit (or one of the causes of action in a lawsuit) based on the breach of this covenant is often brought when the other party has been claiming technical excuses for breaching the contract or using the specific words of the contract to refuse to perform when the surrounding circumstances or apparent understanding of the parties were to the contrary." (from law.com) However, my bank has tried to use Sec. 229.19 as a loophole and technical excuse. Not so fast. One thing is the right to do something and another is the liability involved in the manner of using that right. I bet many other banks might be trying to get off in the same way. I had to do my homework to figure this out, so I'm passing it on in case it might help someone.

I realize the law on endorsements won't be of much help except maybe in context, meaning that the item was nonlocal, over $5,000, irregular for my account, and not deposited in person. What I think is more significant is the fact that I went to the bank before I withdrew any money and asked if the funds were totally clear before accepting them. The bank basically ignored me and did not look beyond the surface and I trusted them. The bank violated the implied covenant of good faith and fair dealing.

If money appears in my bank account unexpectedly, I'm not going to spend it because I know it was a mistake and it will just be taken back. Unauthorized deposits can't hurt, but unauthorized withdrawls are a rip-off. So if it wasn't you, you need to make a criminal report on whoever took the money out. It sounds like you fell for one of those schemes where someone gives you a bad check or otherwise fraudulent deposit, then wants you to withdraw most of the "money" and give it back to them. Though it seems like that may be the bank's problem, actually the customer takes the risk of any bad deposits.

Ed, Banks have never been required to get (your) an endorsement on a check if it is being deposited. A rubber stamp (courtesy) of "DEPOSITED TO THE WITHIN NAMED ACCOUNT" is all that is required. In regards to funds clearing, there is no way that a bank can determine when a particular item has cleared, short of calling the clearing bank and asking them. Considering the millions of checks cleared each day, you'd have to agree that this isn't feasible. The above poster noted correctly that if you had made your suspicions known to the bank, they would have flagged the item for review, and would certainly have notified you that it was not a wire, but a check. BoA is so bad in so many ways that you can't even count them, but in this case, they handled the item in just about exactly the way that any bank would have done, in spite of what your friends have told you. There are other avenues you should pursue, one of which would be the U.S. Postal Service, since the check was mailed, it constitutes mail fraud. Good luck, I hope you can track these slimebags down.

Bank of America has no way of knowing whether a check is deposited in person or mailed in, though it can tell if it was deposited through an ATM. The law on endorsements has gradually become looser, to the point that banks don't need to get your endorsement for deposits. The reasoning is that if the person named on the check gets those funds in the end then it doesn't matter. But this does not help in cases like mine where a check was deposited without my consent or knowledge. My name was written on the back of the check in block letters along with my account number. I mistrust using electronic banking, but I now realize that if I would have I would have done a better job than the bank did at protecting my account than going into the bank several times to try to get answers from them. Let's not forget that the item was unusual in several other ways, that is, not only was it not deposited in person and with irregular endorsement, it was nonlocal, it was large ($7,500), far exceeding my account. I also asked several times before whether the funds were totally clear, and I was lied to when I called their customer "solutions" line. I was told that a report had been filed and then later I found out that no report had been filed. All in all, this amounts to wreckless behavior and intentional misrepresentation on the part of Bank of America. I'd be interested to know how many other people out there have had a similar problem, and if they are with another bank, what their bank would have done in this case. A number of persons have told me that their bank would not have done what Bank of America did in this case.

People should realize that if they wants funds before a check is cleared do so at their own risk. They should also tell the bank to place hold on items that they are not sure of. Don't trust the bank to do that for you even though Federal guidelines in Regulation CC give recommended times. A bank can be held responsible for holding an item LONGER than the guidelines suggest but not for failing to hold it or making funds available prematurely. In other words shrewd banks are ignoring holds and verifications because the loophole in Sec. 229.19 of Regulation CC does not prohibit banks from doing so and, further, allows them to charge your account if the item is returned. So beware of your bank! Also, defrauders can deposit a check into your account without your knowledge because the law on endorsements is so loose. The legal reasoning is that if the person to whom the check is written gets the money in the end then it doesn't matter. This works for most cases but what happens in a case like mine, where I would not have approved of that item entering my account. My endorsement, and deposit in person, or simply a call from the bank to ask my approval would have sufficed. Mind you, this was a nonlocal check for $7,500 and I had nowhere near that much in my account before the deposit. Look up regulation CC and if you don't like what you see, especially Sec. 229.19, contact your house or senate reps so that we can do something about this.

Other reports here complain about banks putting holds on their deposits. This complaint is that a hold was not put on a deposit. What's a bank to do? In my world -- and I'm going to agree with the OP here -- EVERY deposit would be held until funds confirmed. Every deposit. Local, nonlocal, large, small. You hand a piece of paper to your bank and they only give you cash once they have the funds. In this day and age, there's no reason why it should take a long time to transfer funds from bank to bank. As for the fraud here, I'd be more interested in how they go about depositing a check into someone else's account. I think that's the big hole that needs to be closed. That transaction should certainly flagged as suspicious until funds are transferred. Maybe if you hadn't kept phoning and asking, they wouldn't have released the funds. But I'm sure you were anxious to find out if this "deal" was legitimate. Unfortunately, it wasn't.

Yes, I was the victim of a scam to resend money. I was told by the scammers that I would get a wire transfer but instead a fradulent check was deposited into my account without my knowledge. I went to the bank three times before I withdrew any money and inquired about the transaction and no one at the bank bothered to look further into the matter so the bank didn't tell me it was a check until it was too late. A wire is usually quick a check is not. I know that, but I didn't know there was a check. Even though the item was unusual in general and unusual for my normal account activity, i.e., it was nonlocal, it was for $7,500, it was not deposited in person by me, it was not endorsed by me, and it far exceeded my average balance the bank did not follow Regulation CC guidelines to hold it for at least five days, what bankers call the five-day rule. Instead, despite my repeated inquiries, the bank made the funds available and assured me that they were clear, while I'm thinking it was a wire, and like I said, the bank not bothering to look into it. I didn't ask for money sooner from the bank, I asked for protection, talked to the bank about it at least three times, but the bank failed to protect me. Regulation CC is about making funds available in a timely manner. It also specifies very clear liability for a bank's failure to provide funds in a timely manner. But my point is the OPPOSITE! Regulation CC has a BIG HOLE in it which is a LOOPHOLE for banks to be negligent. Regulation CC does make a bank liable for making funds fully available prematurely, without following guidelines and availability schedules, and it allows banks to charge the customers account if a check is returned. In my case, if the bank had followed the guidelines it would have caught that check in time. Regulation CC Sec. 229.21 needs to be ammended to say that nothing prohibits a bank from making funds available before the recommended schedules if and only if the customer signs or initials as taking responsibility, otherwise the bank assumes liability for making non-existent funds available as if already cleared. Also, the bank can only charge the customer's account for a returned check which was paid out before the times suggested in Regulation CC when the customer had assumed liability for the prematurely released funds. It would be easy for a bank to fail to follow Regulation CC guidelines because apparently there is some confusion and lack of proper training amongst bank tellers and clerks concerning its application. From what I have learned, catching unusual items, such as large nonlocal items, etc.. is a front line matter, that is, the clerks and tellers and not the computer are the ones responsible for. Third party companies offer banks special training seminars for employees on how to follow Regulation CC. So don't assume that your bank is necessarily doing a good job at implementing it. Those of you thinking of writing a rebuttal think of what I am saying in context of the details of this case. In the political clamor to make funds available on time what has been overlooked and even condoned by Regulation CC, is that a bank ca be lazy, smug and negligent with making funds available TOO SOON, sooner than the guidelines-- which are meant to protect both bank and customer-- suggest, even when the customer repeatedly asks for assurances as in my case. This flaw in the system allows for deposit fraud and kiting. In this day and age of technology banks have been given every resource to clear items in a timely manner. There is no excuse for a bank not protecting itself and the customer by following the appropriate delay times for certain items. Furthermore, when I called the bank's customer solutions line I was treated rudely and told that a report would be filed but later I learned that no report had been filed. This is intentional misrepresentation. The bank admitted verbally that this one fell through the cracks (I'd call it more like a big hole) but that it nevertheless did nothing wrong, meaning that it was not technically illegal. However, the bank's omission clearly falls under the category of negligence and lack of due care. I have contacted several other banks in my area and all have said that they would not have allowed this to happen in their bank. Due care is defined in terms of prevailing conmmercial standards of practice by similar businesses and what Bank of America did is an anomaly. It is not your usual rip-off but the customer does wind up paying for the bank's incompetence. As I said Sec. 229.19 allows greedy banks who want to cut employee time and overhead, who want to automate everything and eliminate the human element, who are passive when approached with a complaint (hoping the customer will give up), etc., the perfect opportunity to be irresponsible and think they can get away with it because all they need to do is make the little guy pay. This wreckless attitude is built into Bank of America's disclosure agreement, where phrases like in some cases and we may abound. Bank of America's dream is to have a machine where all transactions are done, no tellers, no customer service, and accompanied with a disclosure agreement that is thrown at the customer as a contract of adhesion wherein the customer is responsible for anything that goes wrong and is stripped as much as possible of legal rights, no jury trials, no class actions, etc.. The bank's efforts to be elusive and non-committed can be clearly seen in the language utilized in the disclosure agreement. The bank thinks it sounds official but in their effort to be slippery it shows. Any reasonable person knows when they are being addressed in a clear, unambiguous, comprehensive, and committed manner, and the disclosure is none of these. Of course, many of you may know that these oppressive trend on the part of banks and other large companies is being challenged in courts across the country.

In response to your example, If the person didn't SPEND the money that was deposited into their account BEFORE the bank collected those funds, the ONLY fee they would be charged is for the check being returned, MOST banks this amount will be UNDER $20.00. But if the person DID spent this money, THE CUSTOMER would be responsible for the check. And If all of a sudden there was EXTRA money in my account, I would ask the bank to check it out for me, and NOT spend it. If this isn't what happened, please respond better example of what happened.

Were you a victim of the scam where you get sent a check, then you send money back? You didn't give much detail, but it sounds like that may be the case from your post. I am unclear where you say that the check was deposited without your knowledge. Were withdrawals also made? All banks and other financial institutions, from time immemorial have stated on the documents "Funds are subject to collection" (or similar). When a bank submits a check for clearing, they have no way of knowing when it actually clears the account on the other end. The bank which receives the check has a window of time when they are allowed to legally turn the item around and send it back to your bank. This all takes time, but unfortunately (or not) your bank is required to make those funds available to you within a certain time-frame. The fact that the funds become available to you, in no way guarentees that the check has cleared on the other end. If you consider the millions of checks which are processed each and every day, there isn't any practical way that a bank could determine the current clearance status of a particular item. What it all boils down to is that the vast majority of items are good, and clear and become available to you. Once in a while a bad item is submitted. If there is a question in your mind (which it sounds like there was) you should never draw on the funds until the time period has elapsed in which the item could be returned from the other bank. This isn't always obvious, so err on the side of caution. One more thing... sometimes a bank will attempt to return an item after the time period has elapsed. They know that often if no one questions it they will get away with it. If you had an item returned to you, ask your bank to determine that it wasn't a 'late return'. If it turns out that it was, the other bank will have to eat the loss, not you.

Eduardo, The title lists Bank of America but the body of your post just quotes some banking code. What exactly was the rip off by Bank of America?