When someone falls for a fraud, they’re often tricked by the con artist as part of the process.
Sometimes, they give a bad actor access that puts their personal information or their finances at risk. It’s called a victim-assisted crime because to be successful, the scammer needs the victim to participate.
When it happens — and it happens frighteningly often — victims often find that their bank didn’t, or couldn’t, protect them.
That’s why Kosmo Alexandrou, 76, is out $142,500.
“This story isn’t about me being scammed. I am sure I am one of millions who have fallen victim to computer fraud, and I am embarrassed about this,” Alexandrou said. “This story is about how Chase Bank failed in their duty of care and internal controls, allowing a fraudulent transfer of my life savings without proper safeguards.”
Kosmo Alexandrou was scammed out of $142,500. He says his bank should have done more to protect him.Courtesy Kosmo Alexandrou
Before we get to what happened in Alexandrou’s case, let’s first address his allegation that Chase “failed in their duty of care.” He specifically cited the Electronic Funds Transfer Act. It has a provision called Regulation E, which details consumer protections during electronic fund transfers, including certain instances of fraud.
Regulation E protects you from unauthorized electronic transfers that are initiated by someone who does not have the authority to access your account, said Jennifer Itzkowitz, an associate professor of finance at Seton Hall’s Stillman School of Business.
She said the deciding factor in whether you are covered by the regulation is how the payment is obtained.
“If someone uses your account information, you are covered by Regulation E. If you make a payment without giving out your account information, you are not covered by Regulation E,” Itzkowitz said. “In other words, Regulation E does not cover you when you initiate or authorize a payment, even if you have been tricked into the payment.”
What kinds of payments should be covered has been the subject of a long-running fight between consumer advocates and banking executives.
At one Congressional hearing in July, Democratic lawmakers argued that banks should reimburse customers who are scammed, saying that getting fooled doesn’t mean you’re really authorizing a money transfer. They say banks should be required to reimburse customers because if the banks are not held responsible, there won’t be a financial incentive to fight fraud.
Banking executives, though, argued that including payments technically authorized by consumers who said they were tricked could give consumers incentive to lie and make false claims about scams.
Now as we move back to Alexandrou’s story, remember that he’s come forward to Bamboozled not because he thought we could get his money back, but because he wanted to warn and protect others.
We applaud that because the more people who come forward and share their stories, the better safeguarded we all will be.
HOW IT HAPPENED
Alexandrou was planning to transition to part-time work — he’s a banquet waiter and occasional bartender at a hotel restaurant — because Social Security isn’t enough to pay his bills.
He was using his laptop in May 2023 when a pop-up message appeared, declaring his computer was compromised and he needed to call a Microsoft support number.
That was the start of the scam.
Alexandrou called the number, and what happened next is actually a pretty common scam. The person who answered said both his computer and his bank account had been compromised. Through a series of calls, he was convinced to install software to “protect his computer” and to move his money out of Chase, again, to protect it.
The fake representative said he created a cryptocurrency account in Alexandrou’s name and he transferred $142,500 to the account.
“Mr. Alexandrou stated he did not give (the agent) his Chase account number or login but stated they already had all the information and completed the transaction on his behalf,” Alexandrou’s police report said.
After he realized it was a fraud and he reported it to Chase, the bank promised an investigation, but the claim was denied in a letter dated May 24.
But Alexandrou said he didn’t receive the letter until June 5, and he called the bank for a more thorough explanation. Nothing was clarified, he said, so he appealed the decision in writing on June 22, citing the Electronic Funds Transfer Act.
He received another denial letter on Aug. 1, but this one confused Alexandrou even more.
It said the claim was denied because the wire transfer to the cryptocurrency account was processed “based on your instruction.”
It said the bank’s records show his device was used to log in to the account and then a one-time activation code was sent “to the number on file” to authorize the wire transfer.
Then it said something that Alexandrou vehemently denies.
“Our Retail Fraud team contacted you about the wire transfer,” the letter said. “You advised them the wire was valid as your financial consultant suggested the cryptocurrency investment, you advised you were the beneficiary of the investment account, and you were comfortable sending the wire.”
Alexandrou insists he never received a phone call.
“I have never had such a conversation with any Chase representative, nor did I authorize the transfer in any way,” he said. “And how ludicrous is it that I, a 76-year-old, would transfer my life savings to a cryptocurrency account?”
There was some more back and forth between Alexandrou and Chase, and he asked the bank to provide him with a copy of the recording.
“We are unable to review the audio recording due to the retention period,” the response said. It also said even if the recording did exist, he’d need to file a subpoena.
Alexandrou said he isn’t sure he believes a recording doesn’t exist. But without it, there’s no way to prove definitively that he did or did not approve the transfer.
We asked Chase to review what happened.
Shortly after, Alexandrou said he got a call from Chase. It said it was still investigating, he said.
When the bank responded to our inquiries, details were sparse.
“We are sorry that Mr. Alexandrou was a victim of this scam,” Chase said. “We urge all consumers to ignore phone, text or internet requests for money or access to their computer or bank accounts. Legitimate companies won’t make these requests, but scammers will.”
It did not address questions about whether it still had the recording that Alexandrou believes would prove he never gave permission for the transfer or how long it retains such recordings.
It did offer a host of scam prevention tips that we don’t have space to share here.
Alexandrou said he feels let down.
“I feel that someone took a knife and stabbed me in the back,” he said. “And now that the bank isn’t going to do the right thing, I feel even more betrayed.”
If you have an opinion about Regulation E, contact your lawmakers. You can find contact information for members of Congress at Congress.gov.
Stories by Karin Price Mueller
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Karin Price Mueller may be reached at KPriceMueller@NJAdvanceMedia.com. Follow her on X at @KPMueller.