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The Bank: The Consumer’s Superhero Against Fraud

Yesterday was a normal day. Traffic, coffee, emails, meetings, etc. Nothing out of the ordinary, just a regular old day–until my bank called to verify if I made a $400 purchase at a Wal-Mart in Georgia. Considering that I live in Boston, I was more than a little mystified.  At that moment a million things began running through my head:

  • How did this happen?
  • Did they charge anything else?
  • What about my credit cards?
  • Do they have my actual account number?
  • When did customer service hold music become so suspenseful?

I began imagining my next week.  Endless phone calls to the bank, getting passed around from department to department, obsessively checking my accounts, and everything else that goes along with that particular nightmare.  Much to my pleasant surprise, my experience was the exact opposite. Once the very kind and extraordinarily helpful Cambridge Savings Bank customer rep picked up the phone, I was all set in a matter of three minutes. Not only did my bank decline the initial purchase, but they immediately put a hold on my account and canceled my debit card. Done and done.

Personal Account: Covered. Business Account: Maybe Not

However, if I were a business owner, I might be singing a very different tune.

Personal accounts are protected against fraud through Federal Reserve Bank Regulation E (also  known as Reg E). While in my case it was a debit card, if the thief actually hacked into my account and made a fraudulent payment, Reg E would have me covered no problem.

But if I were a  business owner and someone hacked into my account and made fraudulent payments, then Reg E offers absolutely no recourse whatsoever.  In fact, if the loss goes unnoticed for more than one day, the result is often a highly contentious battle of finger pointing between the customer and the bank. Whether it’s a hacker or an insidious plot from an employee, when it comes to fraud, business owners are the most vulnerable and least protected.

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