Beware the Banks

[AvalonRetail]

Hi
Here is my tale. I hope I've put it in the right place.

This is a warning tale of what can happen if you get caught by one of the increasingly clever hoaxers. I know this because it happened to me recently. I take it for granted that you, like me, believe that scammers, hoaxers and fraudsters are the scum of the earth so I will concentrate my tale on the following events.

Neither the bank nor I suffered any losses but I have still been severely penalised by the bank for my mistake. The bank have not said that their action was prompted by recent events but I have been a customer for 20 years and they have never carried out a ‘routine review’ before. Their conclusion was that I no longer meet their criteria. What changed?

The moral of this story: Please be warned. If you have all of your accounts with the same bank then make sure they are not linked. If possible move one to another bank. And if you get an email from anywhere in the world with a large order that is out of the ordinary the safest thing to do is ignore it. It might be genuine and profit lost but better safe than sorry.

Following bank advice, my personal and business accounts were linked. Easier when you go online as you only need one password. But when something goes wrong it affects all your accounts. Just imagine how you would manage without access to business or personal bank accounts for several weeks.

I received a personal email enquiry on my business email address from an overseas import/export company who wanted to place a large order to be shipped overseas. As I’m only used to dealing with small personal orders, mostly within UK, I was very sceptical. I have never used the services of a credit reference agency but now seriously wish that I had on this occasion.

After several days and many email exchanges I felt confident that this was genuine and a deal was done. My bank told me to give IBAN and Swift codes and accept payment directly into my business account. They assured me it was safe and cheaper than paying merchant fees. I sent this information to the ‘customer’ and was told payment had been sent. A couple of days later I received another email from the ‘customer’ telling me that there had been a mistake and a payment for three times the order value had been sent and could I return the excess. Now it sounded like a scam but I hadn’t shipped the goods and had no intention of returning any money unless the bank could guarantee that the payment was genuine.

This is where it gets truly scary. I suddenly found I couldn’t log on to online banking and when I went to draw cash from my personal account the machine kept my card. Both my accounts, business and personal, were frozen without warning. So there I was on a Saturday afternoon with no cash, an empty fridge and a hungry dog.

I was then told by the local branch that the accounts were being closed. I lodged a complaint at the branch as I felt this was very wrong. No one from Customer Service or Fraud Investigation contacted me. The complaint was denied and the process continued. I then appealed to the Regional manager for a review. After another couple of weeks he said there was nothing he could do to change things and the original decision held. Both accounts are now closed.

I contacted the Financial Ombudsman, who said the bank must give 30 days notice. I had only been given 14 days therefore the Ombudsman was willing to complain on my behalf but didn’t feel that it would be of much help. Otherwise there was nothing the Ombudsman could do. Any bank can close any account at any time without giving a reason. I also contacted a solicitor who didn’t think any laws had been broken but I might have a claim for ‘distress’.

The truly hypocritical thing is that twelve months ago the bank presented me with an award for overcoming adversity, I’m disabled, and setting the business up. How quickly you can go from star to pariah. They also declare their support for SME’s at every opportunity.

Thanks for reading this
Olive

[vangogh]

Sorry to hear about your ordeal Olive. I'm wondering though if the issue was really a bank one or more the company that attempted to make an order. Sounds more like the other company was trying to pull a fast one.

I have my business and personal accounts linked, but I always take in money through either a merchant account or by depositing a check. I wouldn't give out my banking details to a company I didn't know.

Actually a couple years ago someone contacted me for work and wanted to pay via a direct deposit into my checking account. I suggested instead he give me a credit card number. He continued to insist on the direct deposit and I continued to refuse. In the end he never did become a client. I don't know if a scam was involved and when I wouldn't give out the info it went away or if it was simply a matter of us not being able to agree on how to pay. Either way I wasn't going to give out my account info to a stranger.

Do you know why your accounts were frozen? Has the bank given you a reason? They should have told something and not giving you the 30 day warning sounds wrong. Have you been able to get access to your money again or do you have any idea when you will be?

Maybe this is a combination scam company and bad banking policies. Again I'm sorry this happened to you.

[billbenson]

This one has me confused. He sent you what he said was 3 times the correct amount. If this was by wire, did you get the money? If not, where did it go?

I do wire transfer orders from questionable countries for say 20k to 30k. Once the money hits my account, its mine. I use a special account for this, but a lot of companies that do business by wire transfer put their banking details on their website. In fact, for certain types of government business, you need to register your bank info with the US govt and it is public record. I just went through this friday.

Seems like there is something missing to the story here? Was it a wire transfer? What bank? Did the wire go through all the proper channels when sent etc.

[AvalonRetail]

Hi
I have a merchant account on my web shop but it has an upper receiving limit which they refused to raise. The original payment was larger than the limit. I considered asking the 'customer' to pay in two parts to be within the limit but rang the bank for their advice. It was their idea that I gave him my bank details. I wasn't happy about it but they assured me it was safe.

All I have been told is that a counterfeit cheque was received. My accounts were frozen whilst this was investigated, they said for my protection. When the investigation was complete they closed the accounts.

Yes I have access to my money but have had a terrible time getting new bank accounts. I now have a personal current account without a cheque book or debit card. At least I can set up direct debits to pay personal bills. The only business account I've managed to get is a savings account with a small building society so I now have somewhere to deposit business cheques.

I've spent the last few weeks shuffling money around so that it's where I can get at it. It's driving me crazy.

[vangogh]

That does sound like the bank is partially responsible then, since they gave you the advice. I'm guessing they now see you as a bad risk based on the counterfeit check. I think the way the banks look at things is that they see you as someone who might take counterfeit checks again in the future as it's happened once in the past.

How come there's a limit on your merchant account. I hadn't realized there were limits on what you could take in, though I guess it makes sense.

I guess the lesson is to make sure to go through the merchant account instead of directly through the bank for that extra level of security. The merchant account probably would have charged a fee for the bad check, but you wouldn't have the same issue with your bank account. For yourself I think as unfortunate as the whole situation is all you can do now is learn from what happened and work to rebuild your credit with the bank.

Again sorry you had to go through all this.

[billbenson]

Oh, so you received a fraudulent check and deposited it. That changes things a bit. Unless you are very sure, use wire transfer for all international orders. The only time I don't is with companies like Exxon.

International fraudulent checks or credit cards take about a month for the banks to catch up with things and tell you is fraudulent. I certainly wouldn't ship for at least 1 month on an international cc or check, but companies are used to wire transfer. They expect it.

As far as limits, credit card processors are getting nervous about large orders. Mine takes them, but I have a long history with them. Companies don't usually like to put more than 10k on a credit card though. Domestically they will want terms after that or go check or wire.

[nealrm]

It sounds like bad luck and bad timing. The initial transfer was fraudulent and the bank did the correct thing in closing your account. Usually, there a new account is created and the funds transferred over to that account. Unfortunately, the recent financial mess has caused banks to change how they look at businesses.

[AvalonRetail]

Hi
No I didn't actually receive the cheque so didn't bank it myself. I don't know who or where it was paid into my account. The bank won't tell me anything else. I expected it to be a wire transfer from the information given by the 'customer'.

It only took them a couple of days to identify it as fake and they took immediate action. I'm glad they spotted it but still feel a little disappointed that they felt the need to close both my accounts and leave me stranded.

Until this occurred I didn't know I had an upper receiving limit. It's never been as issue before!!

[vangogh]

I'm guessing this is all just bank procedure to protect themselves, but I'm surprised they won't tell you anything. I would think since it is your account they'd let you know what was going on.

[AvalonRetail]

Yes that would have been good. All they have managed to do is give the impression that they think I am responsible for this.

In a way I guess I am as I was prepared to do business with the 'customer' but not in any illegal or fraudulent way.

All I can do now is learn from it and move on.

[vangogh]

All I can do now is learn from it and move on.

True. It's hard, because how are you really supposed to know if your customer is going to give you a fraudulent check. Sure, you can see some signs that might make you question it, but in the end you have to trust the check will be good. You're only real method is the bank and merchant account letting you know.

[billbenson]

Then it sounds like the bank must have been mailed the check with a deposit slip?

[phanio]

Strange that your bank is not on your side. Once cleared up - this may not be the bank for you. Is this a small bank or a national bank? Maybe a small bank just does not know how to deal with this type of thing.

In the future - I would suggest you do letters of credit for large international orders. This is your best protection. YOu can set these up yourself or require your customer to set it up.

I letter of credit acts as a middle man to the transaction. It ensures that payment will be made with legitimate funds to protect you and that the goods shipped are per the order to protect your customer. Essentailly, the letter of credit ensures that both side are above board.

Hope you get this cleared up soon.

[AvalonRetail]

Hi
This was one of the largest banks in UK.

Thanks for your suggestions. I'll keep them in mind if there is a next time.

[janiels]

That's the spirit, we should know when to change and what to do in cases like these, but it really was scary for a bank to immediately close your account without prior notice..