Individuals across the country are filing lawsuits against credit unions and banks for failing to place surcharge notices on their ATMs. Financial institutions in Michigan, California, and Illinois have been hit hard by the recent suits which claim that the terms of the Electronic Funds Transfer Act (EFTA, or Reg E) are violated when the institution fails to post notice on or at the ATM that non-members will be assessed a surcharge. More than 30 suits are pending in Michigan alone.
The language of EFTA requires an ATM customer be told up-front when a fee will be charged, how much the fee is, and the opportunity to cancel the transaction. Some of the lawsuits are class actions, which in theory could mean all of a credit union’s ATM customers may qualify for reimbursement.
http://www.ncua.gov/Resources/RegulatoryAlerts/Files/Prior2003/01-RA-06.pdf
http://www.fdic.gov/news/news/financial/2009/fil09066.html
http://www.cutimes.com/2011/01/13/big-spike-seen-in-atm-fee-disclosure-lawsuits
Activity – Excessive ACH activity on an account could indicate an account defined as personal is being used as a business account. Most transactions come from ATM providers, while others are excessive NSF returns. The credit union is often unaware that excessive and abnormal activity is occurring. These could be commercial accounts flying under the radar while purposely being used to avoid the scrutiny and due diligence required for accounts of this type. Flag these accounts as high risk when large withdrawals and corresponding deposits occur. They are invitations for money laundering and potential for money store accounts. Nearly every origin with excessive suspicious activity should be analyzed for potential fraud, money laundering, check kiting, and high risk activity.
Activity – Member avoids currency transaction monitoring by depositing cash into multiple accounts, some on which the member is the primary account holder and others as only a joint owner.
Activity – Member gets a line of credit and wires the money out of the credit union, or they purchase giftcards through the miscellaneous receipts process. Member then makes large payments on the loan and each time the available limit grows, another wire transfer is made. Many times it is a wire. If the member receives the disbursement via cash, our BSA monitoring system picks it up and there’s a record of the transaction. Consequently the activity is the transfer to the wire G/L.
Activity – Members who make deposits at one institution using funds drawn from another financial institution, when that account has no balance, are guilty of Check Kiting. These members are “playing the float.” Viewed as suspicious in most cases, tellers are encouraged and even obligated to place extended holds on these accounts.
Activity – Currently credit unions must review the file maintenance logs to determine if the changes made to member accounts were completed correctly and with the proper authority.
Activity – Credit unions are required to extract the FinCEN report and visually compare the reported list of names to see if any members are on the list. To date this has been done manually using Member Inquiry.
Activity – Member has not had any debit card or credit card activity (primarily Visa) for an extended period of time. A sudden onslaught of transactions in extraordinarily large amounts are one clue that this is identity theft. This activity has the potential for both loss of the card and card information. With the stolen identity, the perpetrators often purchase gift cards from retailers which they re-sell at a discount; or they take copious cash advances which are then used to purchase high-demand, easily liquidated goods such as electronics and jewelry.
