This morning, as I was drinking my coffee and waking up slowly, I watched a report about a new type of scam which involves unauthorized bank transfers. Although the report mainly applies to the German banking system, this could also apply to other countries where law permits it.

Basically, fraudsters will generate a random bank account number, and they will try to transfer 1 cent to that account number. If the transfer bounces, it means that the account number is non-existent. However, if the transfer is accepted, fraudsters will know that the bank account exists. Next, fraudsters will fill in a bank transfer form manually (internet would not work, since fraudsters would need additional login details), pretending to be the bank account owner of the person, they had previously transfered 1 cent to.

In Germany, the trick would work, since banks are not obliged to check the validity of a transaction. Therefore, it is possible for transactions with invalid signatures or names to go through.

There is not much a bank account holder can do in order to prevent this type of scam. However, each and every account holder should check his/her bank account credits and debits regularly. If an unauthorized charge has taken place, the account holder can dispute the transfer, and chargeback the amount. At least in Germany, it is the bank’s responsibility to prove that the transfer was valid.

There are still so many flaws in the law, or a lack of specific control mechanisms, which make such fraudulent actions possible. If the bank would compare the name, account number, and signature of the account holder, this would significantly minimize the chance of such fraudulent cases.

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