Thursday

Is it identity theft or is it bank robbery --- and whose fault is it?


We've talked before about identity theft and its dangers and lots of people have. There's even a terrific British Youtube about it and the puzzling question of whether it is really identity theft at all (or is it just electronic bank robbery?). Well maybe we're about to find out.

Patco Construction Company, Inc. v People's United Bank dba Ocean Bank, no pending in state court in Maine, may tell us just whose fault it really is, besides the cyber criminal of course.

Patco was a long time customer of the bank but after losing hundreds of thousands of dollars from online theft and then getting a notice from the bank that they wanted Patco to pay it back, they decided they had enough. Patco sued the bank for the loss. 'bout time, some would say. So would I.

While the claims include negligence, breach of contract, breach of fiduciary duty, and more (what, not bailment?), fundamentally the theory is that the bank failed to live up to its most basic obligation, which is to protect its customers' funds from theft. Patco's case is one to watch. With the increasing rise of cyber theft, sooner or later it may happen to you.

The Patco bank's claims of sophisticated "behind the scenes" security measures and computer programs didn't do much good to stop cyber thieves who dipped not only into Patco's accounts, but did so repeatedly, transferring money to accounts that Patco had never used before, and from internet addresses that Patco had never used before either. The thieves even managed to tap into Patco's line of credit for a hefty $200,000 transfer.

When you think about it, Patco's claims make sense. All banks are quick to point out, on their websites and in their paper brochures, how they have all these computer theft protection measures set up to protect your deposits from theft. Much of it is advertising directed at encouraging consumers to use the internet for electronic transfers and bill paying that are high-profit transactions for the banking industry. After all, there aren't many tellers working inside that big bank computer box. Heck, there's even fewer of them at the walk in windows nowadays.

A century or two ago people put their money under the mattress or buried it in the backyard because that was safe. Now when you put your money in the bank, it's because you think it's safe. Well, not quite as safe as it used to be.

Still, if you give a friend $50 to hold for you, it's only natural to expect that they'll have it on hand to give back to you when you ask for it later. Especially if that "friend" is a big bank that collects millions of dollars from thousands of people and then invests it and charges interest on loans and makes money off your money (which they keep). That's a simple idea that any person can grasp.

You expect the bank to protect your money and when they don't, it doesn't really matter whether they had one computer program to stop cyber thieves or a hundred of those programs. When the money is gone, it's gone. But it ought to be the bank's fault.

So let's stop calling it identity theft and call it what it is. Bank robbery. As soon as the banks are forced to stop charging customers for their own account keeping negligence, they will start trying to stop the problem. Sooner or later the bank will decide it needs to fix it so cyber theives can't get into your account.

So when will that happen? When we all make it happen. Banks don't like losing money and they don't like paying out money either. When it starts costing them money, they'll do something about it. Until then, they will keep tellling you that it's "your" identity theft problem and that it was "your" money that was stolen and not theirs.

How Patco's case comes out will be very interesting. But, one thing is for sure, the rest of us will be watching. And you can bet that the banks will really be watching.

Burdge Law Office
Helping consumers protect themsevles since 1978.

Formaldehyde in the Fall, on sale now


Hurricane Katrina was a disaster for Mississippi and thousands are still affected, with populations shifted and the landscape scarred still. One thing it made the public more aware of, however, was not in the wind that day.

After Katrina left the coast and dissipated, and FEMA finally got into gear, the federal government bought thousands of trailers from RV manufacturers for temporary housing for the thousands of displaced homeless families who had lost everything in the storm. For everyone at the time, it seemed like a blessing. The reality was something else.
With most of the trailers, if not all of them, came the smell of death. Now, it's on sale.

Acres of trailers, 483 of them in Brooklyn, are being sold at an online auction by the federal agency charged with disposing of surplus government property. And the sale closes October 2.

"We're trying it out to see how it goes," said Alicia Paris, an administrative assistant who transferred from the Federal Emergency Management Agency's Gulfport office to help with trailer sales. Paris described the lot being sold at Carnes as "7's," which in government-talk means they think the formaldehyde-laden trailers are repairable and can be used as "temporary housing."

Of course, the folks who think these trailers are repairable and livable are the same folks who didn't even see Katrina coming, so you know what that's worth.

As sales go, this one is small. It's only 483 of the estimated 35,000 that were still left over earlier this year, nearly a third of which are located around Columbia, Mississippi. People stopped buying the trailers in 2007 when word leaked out about the heavy dose of formaldehyde that was used in the trailer construction and its ill effects on people living in the trailers without knowing about it.

Turns out, though, that this is all a bit of a blessing in disguise. Congressional investigations and lawsuits have now turned up evidence that the Rv industry has for decades used formaldehyde in construction of trailers, mobile homes, Rv's, motor coaches and other occupational use. None of it was widely known until Katrina came to town. The publicity was so bad that now one company has even started building Rv's that are "green" and promise no formaldehyde use at all and others have promised to cut back on formaldehyde use. That's good for everyone. Especially owners.

The long term health hazards of formaldehyde are notorious, including higher cancer risks. there's a good blog about it here: http://injurylaw.reganfirm.com/2008/02/articles/consumer-safety/fema-trailers-formaldehyde-dangers/.

Meanwhile, be careful. That new smell in your new Rv might not be what you think.

Burdge Law Office
Because life's too short to put up with a bad Rv.