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Leslie Bonacum
Neil Allen

Scams, Not Bug, Latest Y2K Focus Of Bank Regulators, CCH Says

(RIVERWOODS, ILL., July 28, 1999) – The nation’s bank regulators are focusing a bright light on possible consumer and bank fraud relating to the year 2000 date change, according to CCH INCORPORATED (CCH), a leading provider of banking, securities and financial law information.

Ken Benson, J.D., banking law analyst with CCH Federal Banking Reports, notes that federal agencies have acted aggressively to ensure that the nation’s financial system will sail through the millennium change with minimal disruption. Now, their attention has shifted from the Y2K bug to Y2K scams.

"There’s a growing realization that Y2K provides an opportunity for con artists and computer-savvy criminals to enrich themselves," Benson said. "Some may prey on people’s misunderstandings of the Y2K problem. Others may try to take advantage of Y2K programming jobs at banks to commit computer-based fraud."

The latest warnings come from the Federal Financial Institutions Examination Council (FFIEC). This interagency body has identified two specific scams that are in actual use:

    • Individuals posing as representatives of credit card issuers that have called cardholders and asked them to disclose confidential information, such as account numbers. The callers told credit card holders that their cards would not work after January 1, 2000, unless they attached a new magnetic strip to the back of the credit cards. They then asked for account numbers and other information so that they could mail the strips to the cardholders.
    • Individuals posing as financial institution employees, auditors or others that have called customers and asked them to transfer money from existing accounts to ``special Year 2000 safe accounts'' while the institution corrects Year 2000 problems. These callers then asked for account numbers and authorization to transfer the money to one of these "special'' accounts.

The FFIEC advisory cautions that no bank, thrift, credit union or credit card issuer will call them to request account numbers, personal identification numbers or other account information for Year 2000-related purposes.

The FFIEC is a formal interagency body that has the power to set standards for examining banks, thrifts and credit unions. Its members include the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS).

The agency advisory also tells consumers to take precautions that should serve them well both before and after January 1, 2000, including:

    • Reviewing account information regularly and contacting their institutions if they fail to receive a statement on time, since fraud can involve attempts to change the mailing address for accounts.
    • Checking statements for discrepancies.
    • Reporting any suspicious requests for account information.

Institutions Also Warned

Federal regulators also alerted financial institutions to the dangers of criminals who might take advantage of their Y2K compliance efforts. Suggested measures included:

    • Limiting access to updated computer codes to those with a need to know – trusted employees and vendors who have undergone security checks.
    • Performing financial postings and reconciliations promptly.
    • Monitoring large suspense accounts and unreconciled accounts.
    • Making sure that verifications and callbacks are performed for wire transfer instructions received by fax.

"Pocket Money" Not Insured

Another federal agency making efforts to educate consumers about the effect – or non-effect – of the year 2000 on their accounts is the Federal Deposit Insurance Corporation. Benson noted that the FDIC has released a series of consumer brochures and newsletters to reassure the public that their money is still safer in a financial institution than in their pockets.


CCH INCORPORATED, founded in 1913, has served four generations of business professionals and their clients. The company produces approximately 700 print and electronic products for tax, legal, banking, securities, human resources, health care and small business markets. CCH is a wholly owned subsidiary of Wolters Kluwer U.S. The CCH web site can be accessed at

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