Consumer complaint received 2022-04-01
Company: JPMORGAN CHASE & CO.
State: ID
Product: Money transfer, virtual currency, or money service
Sub-product: Domestic (US) money transfer
Issue: Fraud or scam

Complaint:
I am the XXXX XXXX XXXX XXXX XXXX  in XXXX. Another small business in our town performs work for our business as a subcontractor. 

Someone unlawfully got access to our subcontractor 's email system and sent my company fraudulent wire instructions for payment to our subcontractor. The wire instructions included an account name matching the name and address of our subcontractor ( plus a 3 letter abbreviation not part of the real business name ) and an account number. We verified the request was correct by email, thinking we were communicating with the real business but instead communicating with the impersonator, and then wired the money. The fraudulent nature of the activity was discovered roughly 2 weeks after the wire happened. At least one other business in our town was fooled by the impersonator and wired money to the fraudulent account. 

Our local bank issued numerous requests to the receiving bank over the secure messaging system indicating the account was fraudulent and requesting return of the funds. Response from the receiving bank was slow and incomplete. 

Through local law enforcement a search warrant was issued to the receiving bank for account statements and information about the account, in an effort to learn if money remained in the receiving account, and if not where did it go. We received that information via the search warrant before receiving any relevant information over the bank secure messaging system ( our sending bank still hasn't received any relevant information from the receiving bank over 4 weeks since the first message was sent on XX/XX/2022 ). 

Information in the material received from the search warrant revealed that the account name, address and location did not match the name on the wire instructions. The receiving bank accepted the wire based on an account number match, but the account name and address did not match. 

Our sending bank 's search of XXXX code indicates the receiving bank " may rely on the number in a payment order that identifies the beneficiary, even if it identifies a person different from the person identified by name in the payment order, if the Federal Reserve Bank does not know of such an inconsistency in identification. '' Also in this code : " Section 4A-207 provides that a beneficiary 's bank, such as a XXXX XXXX XXXX , may rely on the number identifying a beneficiary, such as the beneficiary 's account number, specified in a payment order as identifying the appropriate beneficiary, even if the payment order identifies another beneficiary by name, provided that the beneficiary 's bank does not know of the inconsistency. '' Did the receiving bank know of this inconsistency in names when it accepted the wire? What are that bank 's wire transfer policies and procedures? Do they require that the name on the receiving account be checked against the name on the incoming wire instructions? If so, the receiving bank improperly accepted the funds and they should be returned.

Company response to consumer: Closed with explanation