Tuesday, December 26, 2006

Your Money Is Not Safe at Washington Mutual

Yes, it's a dramatic title for a post. Got your attention? Good.

I'm currently in the process of taking all of my money out of Washington Mutual and moving it to Chase. This is actually a pretty difficult process... with auto billpay, direct deposit, and what not, there is a significant transactional friction involved in changing banks. But I'm still ending my 10 year relationship with Washington Mutual based on what happened to my boss. It's important to note this didn't happen to me... but I was present for parts of it from the beginning, and I absolutely believe that it happened as told to my by my boss.

A couple months ago, my boss ("G") noticed that there was a $2,000 withdrawal from his bank account that he didn't recall having made. By chance, he caught it within a day or two of the withdrawal having been made. After some time discussing it with his wife, he realized that the only explanation was that it was a fraudulent withdrawal. He called Washington Mutual and headed down there with his wife the following morning, by which point another fraudulent withdrawal had been made from second account he had with Washington Mutual. The bank explained that in most cases of identity theft, it was a family member, so he should check around to see if it could be a family member in this case. In the meantime, he asked Washington Mutual to put a hold on ALL his accounts, and they said they would.

Later that morning, I accompanied G to the police station to file a report. There was a lot to find out, but at least he caught it early. Then something happened that caused me, him, and everyone who was aware of what was going on, lose faith in Washington Mutual. Later that day, there was an additional withdrawal. He called and screamed at the bank because they had promised to put a hold, or a flag, or something that should prevent the fraudulent withdrawals from continuing. A day later... another withdrawal. At this point, he had no choice but to close his accounts and withdraw his money, because he had been hit for five figures, and it was clear that Washington Mutual wasn't interested in protecting the money.

After yelling at the bank manager again, it came out that they didn't want to put a hold on the account because they figured it was probably a family member/forgotten withdrawal. They explained that holds are very inconvenient for the customer, so they decided not to implement it. Because they basically did not believe him about the fraud, the losses from his accounts were far greater than if they had acted when they said they would.

Will he get the money back from WaMu? Surely he will. But having 5 figures disappear from your accounts for even a short time is a major inconvenience at best, and could have severe financial consequences (late mortgage payments, etc) at worst. WaMu basically treated him like he was the criminal, and showed an appalling lack of concern for the security of his money.

Given that WaMu has a crappy network and crappy interest rates, the ONLY reason to use them is their supposedly superior customer service. Without that, they're worthless. I'm going with Chase because I like the international presence, but there are plenty of other banking options that are more convenient than WaMu for various reasons.

Get it together, WaMu. Identity theft is no joke.


Anonymous said...

i fell insecure about wamu for the about the same reason, i had them take 6 months to return 1575 dollars
with this drop in their stocks i am convinced they are going out i went to bank america i hope it is a good choice. i am very concerned about customers deposits i have because i am a business anybody out there think bank america could have financial trouble?

Jemifus said...

B of A is not going down, you'll be fine there. Most individuals should not keep >$100k in any bank, but this is a lot tougher for small businesses. Being at a big safe bank like B of A is probably a good idea for you.

Anonymous said...

I'm glad that there is someone warning people about Washington Mutual. Someone took $1,800 from my account by presenting a fake ID with my real driver's license number. The bank only requires one form of ID and did NOT require the ATM card that I ALWAYS use when I go to the bank. The bank happily gave out my account number when presented with the fake id. When I filed a police report the law enforcement agency stated that almost all of their identity theft cases and fraudulent withdrawals from banks were from Washinton Mutual. I did get my money back within one week but I'm too afraid to place any money in that institution again. They don't care about the loss because they just "write it off." Who really pays for that loss??? The other banks refused to add extra security to my accounts until fraud had actually taken place. Oh, it might be important to note that Washington Mutual REFUSES to prosecute the perpetrator even if I am able to locate the person and refused to assist me in obtaining the bank video for identification purposes (it must be over a certain amount of $ to pursue matter). It has now been over 4 months and law enforcement has not been given the video yet. Thanks Washington Mutual for protecting your clients; no wonder you went under. I hope the other banks take precautions BEFORE and not after theft. I think they should require electronic fingerprint pads inside the bank to allow large withdrawals. We can go to the moon with sophisticated equipment but we cannot protect our money? Who benefits from this scheme?