If you authorize a scammer to take funds from your account, or take them out yourself to pay a scammer, it’s not the bank’s responsibility to cover your losses. The bank typically views the transaction as authorized. Because you initiated the transfer, the responsibility lies with you to avoid scams, and banks usually aren’t held liable for that. The bank processes the transaction but doesn’t verify the recipient’s identity or the legitimacy of the transaction in most cases. Once the money has been transferred, it’s often difficult for the bank to reverse the transaction.
On the flip side, if you get scammed and the scammer makes an unauthorized transaction on your account, you are generally covered through the Electronic Fund Transfer Act (EFTA), although you do have to report any unauthorized transaction within a certain time period.
How Can Banks Help if You Authorized the Transaction
Most banks do monitor accounts and will attempt to notify you if they detect unusual or suspicious activity. They may also put a freeze on your account and help you try and resolve the issue. When the bank does contact you to report anything they find suspicious, they will not ask for your full social security number, your card PIN, an access code from a text or email, or your online banking password. If you do get a message or phone call that appears to be from your bank asking for these things, you may be the target of an additional scam where someone is phishing for your information by posing as a representative from the bank’s fraud dept. Please, please stop falling for these scams!
In some cases, banks may be able to help if the money is sent through a method that is reversible (like ACH payments or wire transfers) quickly after the transaction. If the scammer’s bank hasn’t already processed or withdrawn the money, the bank might be able to initiate a recall request. The quicker you report the scam to your bank, the better the chances that they can intervene, but the odds of recovery usually decrease once the money has been withdrawn or spent by the scammer.
