Suntrust Bank Negligence Leads to $3,000+ Loss for Customer

Does Tennessee permit a cause of action against a bank for the following forms of negligence?:

(1) bank officers fail to heed alert issued by FDIC on counterfeit postal money orders,

(2) bank officers fail to heed alert issued by Knoxville postal inspectors on counterfeit money orders,

(3) bank negligently fails to train its tellers or issue an alert about counterfeit postal money orders,

(4) particularly bank teller cashes $3,000 in postal money orders without even bothering to hold them to the light and check for a watermark,

(5) customer said he did NOT want these money orders tied to his checking account in any manner, and teller responded that he should endorse them as ''not for intended purpose,''

(6) TN statute provides for an endorsement ''without recourse'' that the teller negligently failed to advise the customer. The Suntrust Bank has withdrawn $3019.50 from the customer's account.

Ordinary citizens would have no reason to view this USPS scam alert web page, until after they have been the victims of a counterfeit postal money order crime.

However, banking personnel would reasonably be expected to view these banking fraud alert web pages. After viewing the USPS web page, even a child could detect the counterfeit nature of the three money orders. A bonafide U.S. postal money order has a left-side watermark picture of Benjamin Franklin inside an oval, and that face is easily visible when the money order is held up to the light. Counterfeit money orders usually cannot duplicate that Franklin photo watermark, as is the case with the three money orders in dispute. Suntrust and its tellers failed to take the time to hold even one of the money orders that I gave them up to the light. The right side of the money order contains a different, more common watermark, and I originally assumed that was the watermark referred to on the back of each money order as a sign of authenticity.

Suntrust negligently failed to advise its tellers to be aware of possible counterfeit money orders. When I contacted the Suntrust's toll free customer support, Suntrust's representative told I that tellers would have no reason to examine U.S. postal money orders for possible counterfeit notes, because ?they are treated as good as cash just like an IRS refund check or a check from the U.S. Treasury.? I subsequently learned that the U.S. Postal Inspectors office in Knoxville, TN, had been in direct and personal contact with the security officer for Suntrust's Knoxville-area banks concerning these counterfeit postal money orders, and still Suntrust took no tangible action to alert its tellers to this danger.
By negligence or failing to train its tellers with respect to counterfeit U.S. postal money orders, Suntrust breached a duty of care owed to its customers and also failed to meet the comparable industry standards for reasonable conduct for a bank. In contrast to Suntrust's negligence, according to the USPS web site, when J.P. Morgan Chase received the alert from the FDIC about counterfeit postal money orders ?Thomas Kelly, a spokesman for J. P. Morgan Chase, said that it had issued a security alert to all its branches regarding the counterfeit postal money orders.? Suntrust issued no such alert to its branches.

But for the negligence of the Suntrust in (1) failing to advise I of the proper endorsement restriction (?without recourse?) and giving him a bogus restriction (?not for intended purpose?) to place on his endorsement, (2) failing to exercise reasonable care by lifting any of the three money orders up to the light to see if the image of Benjamin Franklin appeared inside the white oval, (3) failing to train its tellers to be cautious of providing large sums of cash for overseas transfer (rather than a check, which can be traced), (4) failing to issue a U.S. postal money order security alert to its branches following the FDIC alert sent to Suntrust's bank executives and teaching them the Benjamin Franklin watermark to look for as a sign of a counterfeit note, (5) failing to separate the money order cash transaction from I's personal checking account, as requested by I for both personal and professional reasons, and (6) failing to file a claim with its insurance carrier ; I would not have incurred a loss of $3,019.50.

We will now have a court hearing to answer the question of who should bear the loss of counterfeit notes where a customer tells a bank teller: (1) he did not want to deposit three postal money orders to my account, (2) he did not want them linked or tied to my checking account in any way, and (3) he simply wanted to cash the money orders, does a bank have a right to charge his account if they turn out to be counterfeit? The teller told him to endorse the money orders in a peculiar manner: to write 'Not for Intended Purpose' on back, which he thought meant they would not be tied to my account. He subsequently learned that TN has a statute that provides for an endorser to write 'Without Recourse' on a negotiable instrument, but the teller failed to give him the correct endorsement for my circumstances. The teller failed to inspect the money orders or hold them up to the light to check for a watermark. The U.S. Postal Inspectors office in Knoxville had been in direct contact with the security officer at Suntrust Bank about counterfeit postal money orders, but Suntrust failed to give its tellers proper training and alerts to protect its customers.

The bank's attorney seems to think this is a slam dunk, easy summary judgment win for his client. Is there no justice in America? Just how far must banks go before their own negligence plays any part in the recovery of funds?

Dr. Michael A. S. Guth, Ph.D., J.D., is an attorney at law based in Oak Ridge, Tennessee. His practice focuses on enabling people to represent themselves pro se without a lawyer (and thereby save on legal fees), as well as full representation for appellate practice. One area his work has particularly emphasized is child support defense and elimination of the unconstitutional debtor prisons that now saturate our court jurisdictions across the nation. For more information, see URL http://michaelguth.com/prose.htm and http://michaelguth.com/samplepleadings.htm

Michael
Oak Ridge, Tennessee
U.S.A.