posted on June 24, 2001 10:29:49 AM
NetBank froze all my accounts, and NetBank took money out of one of my accounts without my permission and outside any permission granted by its own Terms of Service. Why? I'd like know. NetBank security department does not receive or return my calls. And, at last report, NetBank had not responded satisfactorily or completely to a complaint I filed with the US Office of Thrift Supervision.
I have a theory, though. In the absence of an explanation, that's all there is. So here's my theory ... which completely accounts for all the facts and which leads to my conclusion that this bank is not safe:
First, the factual background: I have a business as a market-maker for e-gold.com. People send me dollars, and I put gold in their account. People send me gold and I send them dollars. I was using NetBank as a transfer device for this business. People would send me dollars by intra-bank transfer, and I was advised by their customer service that these transfers were irrevocable ... which was especially important to me because the e-gold.com transfers are also irrevocable.
On 23 April and 24 April respectively I received two such transfers, both from the same account. I received a corresponding e-gold purchase request on my site, so I transfered the gold. On 26 April, NetBank froze all my accounts, and on 30 April, NetBank removed the same amount of money from my account as I had received on these two most recent transfers.
Now, the theory: The transfers I received on 23 and 24 April were fraudulent. NetBank's security had been breached. A hacker had moved those funds ... benefiting by his order to have me deliver gold to his account.
NetBank was deathly afraid of having to admit publicly that their security was not bulletproof, so instead of confronting the situation head-on, contacting me to get information about the perpetrator (I could have given them the email address he used and the e-gold account number where the gold was sent) and filing a report with law enforcement, they instead froze my funds and reimbursed the victim with my money.
Common sense would have told them that I would be up in arms about this, and they probably reckoned that I would complain everywhere I could find to do so. But I think they considered this a better risk than having to admit that (what were probably some junior-grade) hackers could pop the lid on their system and steal money with impunity. If word got out that it was easy to get through the vault door, a brick-and-mortar bank would want to keep that quiet too, and this amounts to the same thing. Depositors would run with their money, and thugs would descend on the premises like mosquitos on a nudist colony.
"So what," you say, "if NetBank paid the other guy back with your money, he's covered, and I guess I would be too if my account got hit the same way."
There are two reasons you should be concerned:
(1) The General Principle: Nothing in NetBank's Terms of Service give it permission to do either of the things it did to me. By taking its actions, NetBank has demonstrated that its Terms of Service only define limits to YOUR behavior. NetBank considers itself free to do anything it pleases with money you deposit. What they decide to do to you might be entirely different from what they did to me. The point is, there is nothing which NetBank considers binding to prevent it from taking any action of any kind.
(2) Runaway Instability: NetBank had no way of knowing I was a prolific writer willing to commit whatever time was necessary to expose this. They lost their gamble that this would be the best way to keep their poor security under wraps. I'm posting, and will continue to post, this information across the Internet.
Word is getting out, and word will continue to get out, that NetBank is susceptible to fraud. As people learn this they will withdraw their deposits, and the fraud losses will continue to get worse. At some point, NetBank will no longer be able to hide, and the whole house of cards will come crashing down.
You don't want your funds to be there when this happens. If you aren't a NetBank depositor, don't open an account. If you are, withdraw your money while you still can!
