PORT WASHINGTON, N.Y., April 10, 2019 /PRNewswire/ -- Parker Waichman LLP announces that they have filed suit in U.S. District Court for the Southern District of New York (1:19-cv-03134) against Wells Fargo Bank, BNY Mellon and Pershing LLC on behalf of Hal and Marsha Duncan for failing to recognize the multiple red flags that should have been apparent in a suspicious wire transfer transaction.
The saga began when Mr. and Mrs. Duncan, a recently retired couple, wanted to invest their retirement money in a Certificate of Deposit (CD). The Duncans searched the internet and found a website www.bnymelloncdrates.com.
Little did the Duncans know, however, they were not visiting the real BNY Mellon's website, but were in fact visiting a spoofed website. A "spoofed website" is a website that appears to be legitimate on its face, but is actually a website intentionally created to trick visitors into thinking it is legitimate. Financial institutions in the United States have repeatedly been advised since at least 2005 by the United States Government, including the United States Department of the Treasury, to be on the lookout for websites that "spoof" their financial institution. The United States Government has similarly advised financial institutions to also monitor domain registries to make sure domains are not being registered which are similar to the bank's domain name, before they are used to spoof the bank's Web site.
The Duncans reached out by phone via the contact number listed on the website and spoke to a man who identified himself as a Senior Account Manager at BNY Mellon. Following their conversation, this imposter emailed the Duncans instructions on where to send a wire transfer of money.
Hal and Marsha Duncan then paid a visit to their local Wells Fargo bank branch with the wire transfer instructions and showed the materials to a Wells Fargo employee. The wire transfer was to be wired from the United States, then to an Eastern European bank in Armenia and then back again into the United States.
The Wells Fargo employee reviewed the materials, determined the transaction to be legitimate and attempted to wire the funds to Armenia, only to experience difficulties with the international SWIFT code, which designates international banks. So, the Duncans then called the imposter from the website, and handed the phone to the Wells Fargo banker to discuss the SWIFT code issue. The banker then told Mr. and Mrs. Duncan that she was now unable to wire the funds in their account to Armenia because the money in their account had cleared yet.
The next day, the Duncans returned to the Wells Fargo branch and met with another Wells Fargo employee. The Duncans showed the banker the spoofed website on their phone. The banker attempted to visit the same site on the bank's computer, but was unable to find the spoofed website possibly due to a firewall. The banker then searched for the site using the banker's personal cell phone and found the spoofed website. The Wells Fargo employee also searched LinkedIn for the name the imposter the Duncans had been speaking with used, found a Mellon employee with the same name, and wired the Duncans' retirement money over to the Armenian bank without once calling the real BNY Mellon to ascertain if the transaction was legitimate.
Several days later, the Duncans attempted to reach the imposter from the spoofed website, only to discover that his phone number was no longer in service. The Duncans' money that was wired by Wells Fargo to the Armenian bank was gone. It was never wired back to the United States and is believed to have been stolen by the man who posed as a BNY Mellon employee using the spoofed website.
Wells Fargo and BNY Mellon failed the Duncans in multiple ways by ignoring red flag warnings which should have been apparent to bank employees. Banks and their employees are well aware of these signs of fraudulent activity; employees are trained to see them and avoid them in order to protect not only their customers, but the bank as well. These red flags should have raised concerns with the bank employees who worked with the Duncans and include:
- Where a bank is offering a very unusually high interest rate on a 1-year certificate of deposits, which rate is almost twice that being offered in the industry.
- Where the wire transfer is going out of the United States to an Eastern European country only to allegedly be rewired back into the United States.
- Where the depositors do not personally know the alleged recipient of the funds.
- Where the amount of the funds being wire transferred is very large.
- Where this type of transaction is not in the usual course for the depositors.
- Where the depositors are not financially sophisticated and are retired individuals.
- Where the bank is listed as a "beneficiary" on a wire transfer request form instead of the customer.
- Where a bank speaks with a contact from its customer's phones instead of using its interbank contacts.
Regarding Wells Fargo, financial institutions owe their depositors a duty of due care and of reasonable inquiry when they learn that their depositor may be the subject of a scam. Here, with so many red flags waving and sirens screaming, any reasonably prudent banker should have known that these depositors were the subject of the such a fraud and required the bank to, at a minimum, advise the clients that the activity may be fraudulent, and, in addition to other steps, forewarn the customer that the transaction was highly suspect and unusual, and should be avoided. Unfortunately, no such warning was given to the Duncans.
BNY Mellon and Pershing, have no less a duty to the banking public. Banks have an obligation to protect potential customers from being defrauded by spoofed websites that mimic their own, particularly after learning that such activity is afoot and endangering potential customers. Once notified that this type of criminal activity is being undertaken, banks have a duty to monitor domain registries to ensure that fraudulent domains are not registered which closely resemble that of their own financial institution's domains. Similarly, bankers have a duty to monitor the web to ensure that there are no websites that mimic those of their financial institution in such a way as would cause members of the general public to be defrauded. In this case, that apparently was not done.
Parker Waichman has represented clients in consumer fraud lawsuits for decades. If you or someone you know is interested in filing a consumer fraud lawsuit or for more information, please contact Jerrold S. Parker at Parker Waichman LLP at the firm's website at www.yourlawyer.com or at 1-800-LAW-INFO (1-800-529-4636).
SOURCE Parker Waichman LLP