Bank Liability for Funds Transfer Via eBanking

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Question:

A new account (joint) for an existing customer with her adult daughter was opened and had 2 signatures required for withdrawal coded on account and contract. The customer already had Internet banking and the new account was not blocked from being accessed. What is the liability of the bank for funds transferred to an individual account via internet banking?

Answer:

Answer by John Burnett: That depends on the contractual provisions established in connection with online banking or the underlying deposit accounts. Clearly there is a risk that a multiple signature requirement can be ignored when internet transfer capability is available. Many banks include provisions that disclaim responsibility for adhering to multiple signature requirements for that reason.

Answer:

Answer by Andy Zavoina: Many deposit agreements include a clause such as what I have below, or charge a higher fee for the special handling accounts like this would require. Unless you are prepared for it, these would be a real PITA.

"We do not establish any accounts that require two or more signatures on any items drawn on the Account. If, for example, you state "requires two signatures if greater than $1,000," you acknowledge that such provision is solely for your personal or internal control purposes. You shall indemnify and hold us harmless for losses due to paying any item bearing at least one authorized signature."

First published on BankersOnline.com 4/8/13.