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Joint Account Activity: Is this Fraud?
A joint account was closed by one party, then later reopened by the other party who ran joint checks through it: depositing and withdrawing the same day. Is something wrong with this picture?
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 It certainly appears that there is something wrong. It was legitimate for one joint owner to close the joint account. It was not legitimate of the other individual to reopen the account without the consent and signature of the first party.
We do see how the account may have been reopened, however. It's usually the case that banks put closed accounts into a "phased-close" process when they are brought to a zero balance. That ensures that accounts that customers don't mean to close stay on the bank's masterfiles, and that month, quarter and year-end processing all get handled appropriately. Often, if an account is still in a "zero balance" status (or even the next step in the system: "pending close"), a simple deposit brings the account back to open status, and may fail to trigger any kind of alert for the teller handling the deposit. If the first party in your question can convince a court that the account was intentionally closed, and that the bank erred in allowing it to be reopened, he or she might have a claim against the issuer of the joint payee checks, which can place its own claim against the bank that accepted the checks for deposit.
Published on BankingQuestions.com 6/25/09
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