Online Banking may be Costly …

9/1/2006, 1:09 pm

If you do any online banking, pay close attention to the ways your bank protects itself from protecting you.

Here’s part of one bank’s online service agreement (The first sentence hurts when you read it):

“To the fullest extent permitted by applicable law, you agree to be responsible for all unauthorized or erroneous transactions initiated through BANKNAME Online. … An “unauthorized electronic fund transfer” means an electronic fund transfer from a Deposit Account that is initiated by another person without your authority to initiate the electronic fund transfer(s) and from which you receive no benefit …. We may require that the notice be in writing.”

It continues, “You could lose all the money in your Deposit Account, some or all of the money in any linked account, or up to your maximum overdraft line of credit if you have a check overdraft protection line of credit, if you fail or refuse to immediately advise the Bank of the unauthorized use of your PIN.”

This begs a few comments.

1) If someone walks into your bank and robs it, or a bank employee embezzles money, your account is protected. But according to the service agreement above, if someone steals money out of your account using BANKNAME’s online services, BANKNAME is not responsible, YOU are responsible!

2) Stay on top of all account information your bank provides about your transactions. If you see something you don’t remember, call your bank.

3) Your bank is not “your” bank. It’s a business designed to make money for the people who own it. Times have changed even in my small town. I know many of the people who work in my community bank, but I no longer trust any financial institution to look out for my best interests. In fact, I think the statement above clarifies well who the bank is protecting.

4) Form a relationship with a personal banker. Don’t be a stranger. Knowing an “insider” well won’t change the bank’s rules for you, but it may be helpful to have a bank officer who can assist you in interpreting their impact on your finances.

5) It may not be wise to attach a credit card to your account for use as overdraft protection. Nor does it make sense to attach a line of credit to the account if the bank is warning that you could lose “up to your maximum overdraft line of credit”! Consider which could be more costly, a bounced check or a maxed out overdraft line of credit?

6) You are responsible for protecting your finances. Don’t be lazy about it and don’t trust your bank to do it for you!

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