Reused checking numbers give previous owners keys to your account

Banks won't spend a tiny fraction of their profits on trying to avoid problems with fraud arising from recycled account numbers.

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When you lick a problem, you expect it to stay licked. Unfortunately, that's not always the case.

In 2005, I wrote about the banking industry's little-known practice of recycling checking account numbers. In other words, banks were reissuing former customers' account numbers to new customers.

Trouble was, some of those former bank customers saved their old checks, using them later to pull money from the accounts of people who had received their recycled numbers.

California legislators stepped in and passed a law requiring that banks wait at least three years before reissuing account numbers.

A good move. But apparently not good enough.

Irvin and Harriette Williams are both in their 80s. The Culver City couple have been Bank of America customers for decades. Their son, Lorin, 49, now looks after their financial affairs.

Lorin Williams recently spotted an $800 check written on one of his parents' bank accounts to a name he didn't recognize.

"I asked my mom what this was for," he told me. "She didn't know."

There was a good reason for that: She hadn't written the check. Nor had her husband. Looking more closely, Williams saw that the check had been written by someone named Reuben Lopez. The check bore a North Hollywood address.

This prompted Williams to dig deeper into his parents' checking account, where he discovered that Lopez had written about two dozen checks over the past couple of years. Most were for small amounts, which explained why they went unnoticed.

Williams contacted BofA. After looking into things, the bank's fraud experts made a surprising discovery.

"They said my parents' account number used to be this other guy's number," Williams said. "He closed his account 16 years ago, they said, and the number was later given to my parents. I never even knew they did this."

They do. And it's not just Bank of America.

Most major banks recycle customers' checking account numbers. They say there aren't enough new numbers to go around and it would be too expensive to add extra digits.

It's a long shot, of course, that someone would close an account and then hold on to his or her old checks for years, awaiting the opportunity to write checks on someone else's account. But it happens.

After I first wrote about the problem, then-Assemblywoman Carol Liu introduced a bill, which became law, requiring a three-year hold on old numbers before they could be recycled.

Williams said BofA's initial response to his parents' plight was to say it would cover bad checks written only in the previous 90 days. It also said that if Williams wanted copies of all of Lopez's checks, which he did, he'd have to pay for them.

"That wasn't acceptable," he said.

Apparently someone at BofA eventually came to the same conclusion.

After some prodding on Williams' part, the bank agreed to refund all the money Lopez had drained from the recycled account and cough up copies of the canceled checks. It also shut down the account so no more checks could be written.

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