Janice A. Oser, Esq.

Not the bank. It has to be you, most likely. And you need to do so regularly.

The August 30, 2008 issue of The New York Times carried an article about a wealthy private banking client of JPMorgan Chase who learned this past May that nearly $300,000 had been stolen from his personal account through many small electronic transfers over a 15-month period ("The Bank Account That Sprang a Leak: Even the Wealthy Can Be the Victims of Fraudulent Transfers"). The bank, according to the article, had refused to reimburse him for that amount.

The victim, Guy Wyser-Pratte, when told of a 60-day deadline for reporting an unauthorized electronic fund transfer, said, according to the article, that he never knew about that rule, that he had opened the account "eons ago," and that he had never signed anything agreeing to the rule.

Possibly not directly. But under federal banking regulations, a bank is required to make certain disclosures to a customer regarding the customer's personal, or consumer, account (that is, an account established primarily for personal, family, or household purposes). The disclosures must be made either at the time the customer contracts for an electronic fund transfer service or before the first electronic fund transfer is made concerning the account. They include the disclosure that if the customer fails to report an unauthorized electronic fund transfer that appears on a periodic statement within 60 days of its transmittal, the customer is liable (and not the bank) for the amount of the transfer.

Conceivably, this provision might not have been in effect those "eons ago" when Mr. Wyser-Pratte opened his account, but most of us are familiar with the manner in which a bank may modify the terms of an account, either because of new regulatory requirements or because of a change in terms the bank has decided to make. We are provided with the relevant disclosures, and our continued use of the account after the disclosures have been made constitutes agreement to the changes. Mr. Wyser-Pratte may have agreed in this manner to the 60-day rule.

In any event, the article suggests that we ordinary folk might derive some comfort from the fact that even the wealthy clients of elite private banking institutions may suffer unreimbursed losses from money stolen electronically from their personal bank accounts. The bank in Mr. Wyser-Pratte's case is reportedly willing to cover $50,000 of his losses. Even partial reimbursement, however, is not something that the rest of us should count on in the event that unauthorized electronic transfers are made from our personal accounts.

The 60-day rule is found in the Federal Reserve Board's Regulation E, "Electronic Fund Transfers." The regulation also provides that if you, as a consumer, notify your bank within two business days of learning of the loss or theft of your ATM or debit card, your liability for unauthorized use of the card will be limited either to $50 or to the amount of unauthorized transfers during that two-day period, whichever is less. Failure to notify the bank within that two-day period could result in your being liable for as much as $500.

If any notice is given to the bank orally, the bank may require written confirmation of the notice within 10 days. Written notifcation is always best. The notice must enable the bank to identify your name and account number, and why you believe there are one or more "errors" on your bank statement. "Error" is a technical term here that covers, roughly, a deduction of an amount from your account that you believe should be put back. Your notice should include to the extent possible the type, date, and amount of the "error."

Or "alleged error." Once the bank has received a timely notice of a claim, it has a certain amount of time to investigate it, and the bank just might decide that your claim is not valid. If so, there are ways for you to appeal the bank's decision. So any time you believe that there have been any "errors" with respect to your account (including thefts), "put it in writing" - and keep a copy.

The first avenue of appeal would be with the bank's regulator. You can find out which agency is the bank's regulator by e-mailing the Comptroller of the Currency (OCC) at Customer.Assistance@occ.treas.gov or writing to the OCC Customer Assistance Group at 1301 McKinney Street, Suite 3450, Houston, TX 77010. The ultimate appeal may be in court.

Time limits placed on the consumer with respect to notices of unauthorized transfers from the consumer's account or of loss or theft of an ATM or debit card may be extended under certain circumstances. The regulation provides that if the consumer's delay in notifying the financial institution was due to extenuating circumstances, the institution must extend the times specified "to a reasonable period." The Official Staff Commentary to Regulation E gives as examples of extenuating circumstances "the consumer's extended travel or hospitalization."

According to the Times article, Mr. Wyser-Pratte, described as an activist investor on Wall Street for more than 40 years who has a hedge fund with a war chest of roughly $500 million, says that his bank statements have become so complicated that not even a Wall Street veteran like himself could detect the continuing theft. According to a colleague, Mr. Wyser-Pratte writes thousands of checks each month.

"Extenuating circumstances"? Presumably, Mr. Wyser-Pratte and the bank will find out.

In any event, if you want to avoid predicaments such as that of Mr. Wyser-Pratte, on whatever scale, large or small, don't rely on your bank to look after your personal bank account. Sophisticated thieves may focus on accounts with very large balances, but it is not uncommon for smaller accounts to be subject to problems such as formerly preauthorized transfers from an account to be continued to be made, for one reason or another, after the preauthorization has been withdrawn.

And it's up to you to look after your bank account, even if your bank statements are long and complicated, and checking them is a chore.