Do you think it is within the scope of the authorization on a standard loan application for a lender to verify a proposed borrower's bank account balances by dialing in to the automated phone system of the borrower's bank, and keying in their account number and last four of their Social Security Number as a PIN? The scope of the authorization says they can verify the account from any source.
There are several issues here. Is it a violation of law? That is a technical question I could not attempt to answer. Is it improper? Yes, in my opinion it would be. Banks have standard verification of deposit forms and procedures they should follow and using the automated system is generally not in that procedure. It also wouldn't provide them as much information as is necessary to investigate the financial health and habits of the applicant.
A secondary issue is how the bank obtained the PIN. They shouldn't need this and certainly shouldn't have it. Consumers should never share this confidential information, and I would certainly hope the other bank is not known for just using the last four digits of a person's Social Security Number. The customer should insist that it be changed either by them or the bank. This is an out-dated practice, and in today's environment, a poor practice.
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There are several issues here. Is it a violation of law? That is a technical question I could not attempt to answer. Is it improper? Yes, in my opinion it would be. Banks have standard verification of deposit forms and procedures they should follow and using the automated system is generally not in that procedure. It also wouldn't provide them as much information as is necessary to investigate the financial health and habits of the applicant.