Pub 1 2012 Issue 2

16 Leading advocate for the banking industry in Kansas. M OS T INTERNET BANKING providers allow banks the ability to link accounts to a User ID and password so that the bank can allow a customer to access various accounts which they own. However, at least one major internet provider requires all owners of an account to use the same User ID and password. All owners of the main account then have access to all linked accounts even if some of the owners of the main account are not owners of the linked accounts. This has resulted in serious problems. A husband and wife had a joint check- ing account. The wife also had a savings account at the same bank which named only her as the owner. The bank had an internet processor which only allowed one User ID and password to access any account. The wife applied for internet banking and requested that both the joint account and her personal account be ac- cessed by her for internet banking. Later the husband applied for internet banking on the joint account and was given the same User ID and password because the internet processor required only one User ID be used for any account. The couple happily used internet banking under this arrangement for over five years. One day the husband used the inter- net banking to transfer all of the funds from his wife’s savings account to their joint checking account and withdrew the funds. He then moved in with his new girlfriend. The wife was unable to obtain the funds during their divorce proceed- ings, so she claimed the bank was liable to her for the stolen funds. At another bank, a savings account was opened in the name of a young child who had received a large settlement after his mother was killed in a vehicle acci- dent. His father was named as custodian on the account. The father remarried and had a joint checking account with his new wife. Both were given the same User ID and password from internet banking. At the request of the father, the son’s ac- count was added to the internet banking function. The new wife also had access to both accounts even though she was a signer on only one account because the bank’s internet processor insisted that only one User ID and password could be used to access the joint account. The wife transferred the funds from the custodial account to the joint ac- count and then withdrew all funds from the joint account and moved to another country. The father, on behalf of his minor son, made claim against the bank for the stolen funds. The computer technology people told bankmanagement that they cannot allow multiple User IDs to access any one ac- count in the internet banking function. Bank management wanted to allow multiple owners of accounts to access the accounts using internet banking. Bank management had three choices: 1. The bank could restrict access under internet banking to only accounts that all signers are identical; 2. The bank can find a new internet provider that can restrict access to accounts which the specific user has authority; or 3. The bank can ignore the bank’s con- tract with its customer and allowother parties to have access to accounts which they have no legal authority to access. While most bankers would never consider this third option, there are a considerable number of banks that have either willingly, or through error, done Internet Banking Access In an ideal situation, every bank would allow internet banking transfers between accounts only if all owners of the accounts were identical. However, many customers want to be able to use internet banking to transfer funds between any accounts they own even if not all of the owners of the account are identical. Security Officer’s By-Word For more information, Donald Towle can be reached at (785) 228-0000 Charles M. Towle , Senior Vice President Kansas Bankers Surety Company