USAA Allowed Unauthorized Person to be an Account Holder; Worse, USAA Took Several Thousand Dollars Out of My Account Without Cause or Notice

Occasional Contributor

Why is an *unauthorized* person still showing as an Account Holder in one of our savings accounts? This occurred during the period of rampant fraudulent activity in Jan and Feb of this year and I was told it would be resolved. I find it appalling USAA allowed someone to become an account holder without my consent. However, failing to provide an explanation of how it happened and after six months still not removing it is inexcusable.


Separately, I opened savings accounts for my daughters about a decade ago and the current balance - several thousand dollars -  on one of them is now $0.00 (without making any withdrawals). These are legally my accounts, as they were opened when my daughters were minors and I never relinquished ownership of or control over them. Please help me understand how USAA deemed it appropriate to clear out one of my accounts and did so without providing notice. 


I greatly appreciate your prompt attention to these two matters.


@DontWalk.Run!, I understand you have concerns regarding the status of your accounts. I'm happy to ensure your concerns are sent to the appropriate team for further review. Once we've had an opportunity to review your accounts a follow up will be made with you. Thank you. - Rhonda 

Thanks, @Rhonda, for your reply. I consider these serious issues as more than "concerns:" An unauthorized third-party USAA allowed as an Accountholder that USAA had months to research (but didn’t) and misappropriation of thousands of dollars from one of our accounts is extremely disturbing. I’m making this distinction to underscore the severity of the situation for which USAA is responsible and the urgency with which the company needs to act.


USAA hastily and inappropriately applied its "right of offset" from my daughter's individual account to a joint account largely funded by me. Taking this draconian measure reflects poorly on and seriously calls into question the level of customer service USAA claims to deliver its members.


Further, USAA failed to accurately determine the validity of the alleged deficiency or provide me any notice prior to making the improper set-off from our account. In addition, by ignoring signs of suspicious activity in the account and failing to implement internal policies, USAA also unwittingly facilitated the deficiency for which it is trying to hold us responsible.


[1] USAA must accurately establish validity of the alleged deficiency in the account before exercising the right of offset. Uniform Commercial Code § 4-401(b) holds banks liable for the amount of the overdraft when the customer didn’t endorse the check. Even a cursory comparison of the check endorsement with her account signature card (or previous checks deposited) would reveal she didn’t endorse the June 5, 2019, deposit of $22,000 (the “Fraudulent Transfer”). As such, USAA needs to pursue Wells Fargo, the depository bank, to recoup the deficiency and return funds misappropriated from our accounts.


[2] An account deficiency would be impossible if USAA exercised reasonable care.

I would think extra care would be taken by USAA when an account anomoly - $22,000 transaction representing 20x average account balance - like this occurs;  clearly this didn't happen. Regardless, even by exercising reasonable care no monies could be wired out of the account creating the deficiency. Why approve an almost $10,000 wire transfer - 10x the average account balance - when an extremely unusual and sizeable (for this account) deposit hasn't yet cleared. Regulations allow for a hold of as long as five days to process a check in these circumstances.


Further, USAA failed to recognized clear indications of fraudulent activity. The multiple signs of potential fraud include: (a) Online account access within a 24-hour period from multiple and diverse geographic locations (IP addresses reveal this as correct); (b) The Fraudulent Transfer amount exceeds 20 times the average account balance, which makes it highly suspect; (c) Use of a VPN (used by perpetrator of the fraud to mask IP address) to access the account (when never used before); and (d) A next-day request for a wire transfer almost TEN TIMES the average account balance and funded almost entirely from the Fraudulent Transfer.


USAA had two opportunities to prevent fraudulent activity in the account and failed to respond appropriately to either of them. The UCC mandates USAA comply with the first opportunity, which is to not pay on checks with forged signatures.  


[3] Additionally, USAA is in violation of 12 CFR Part 1005.6(b)-2 by wrongly holding us responsible for more than the amount allowed under Regulation E. Note that 6(b)-2 relates to Limitations on Amount of Liability, specifically with respect to consumer negligence.


It states, “Consumer behavior that may constitute negligence under state law, such as writing the PIN on a debit card… does not affect the consumer’s liability for unauthorized transfers.” Further, “The consumer’s liability is determined solely by the consumer’s promptness in reporting the loss…”


Recall the Fraudulent Transaction was initiated after my daughter was duped by a swindler into providing her account information. My daughter shared these facts with USAA and notified the company of the loss within two days of its occurrence, which in accordance with Regulation E limits her liability to $50 (and negates the need to offset my entire account balance).


I hope this information reaches the right person who thoughtfully reviews it, recognizes the situation as a misunderstanding and takes action consistent with the applicable rules and regulations.


Please carefully review this message as I will not spend time talking with someone who is unaware of the facts. The last time USAA inappropriately took $11,000 from my account I spent 50 hours educating various "executive response" teams to get the transaction reversed. I do not wish to go through that tedious and frustrating experience again. Thank you,