My Friend’s Adult Daughter is Draining His Bank Account

What His Options Are

Yesterday I had some rather alarming news from a long-time friend. He informed me that a friend that we both know was having financial issues involving his daughter, who is in her late 20s.

A while ago, he gave her online access to his bank account so that she could pay bills on his behalf and manage his finances.

Now, this “financial management” has resulted in most of his salary being drained into her account, to be used to pay the mortgage on hers and her fiance’s new home, as well as helping to finance lovely weekend trips to wineries in the Adelaide Hills and relaxing afternoons in the beer gardens of Hills pubs.

To make his situation more interesting, earlier this year he agreed to sign a parental guarantee on his home that he owns outright, thereby giving his daughter equity in it to purchase her new home. The couple took out a mortgage with a bank to complete the purchase.

My friend informed me that this guy’s wife had to pay for an electricity bill with her own funds as he now had virtually no money until his next payday.

As we talked about my friend’s situation, I offered a potential solution: I have worked for one of Australia’s largest banks and am aware of how internet banking works. My friend assumed that, rather than arrange a separate login for his daughter (the legal way of granting her access to his online banking), our friend would have simply given her his login details and his own password.

This would have enabled her to not only sign in and transfer funds, but also replace his mobile number in the online banking with her own — this would mean that all further funds transferred out of his account would trigger text messages to her mobile, no longer his. He would have been clueless about any funds leaving his account.

My solution to this is for him to change his password, then change the mobile number back to his. It goes without saying that she would not be too impressed about this loss of financial power and potential dent in her lifestyle.

We wondered about what her anger would lead her to do. My friend thought that she might then refuse to make payments on her mortgage, thereby potentially blackmailing our friend into either making them on her behalf or risking eventually having both her home and his sold by the bank. I said that surely she would not go down this path, as it would destroy both her and her father’s credit ratings in the process.

What is this Crime Called?

As the daughter in this case is using our friend’s salary for her financial benefit, this falls under the definition of fraud, as defined by Investopedia.com.

It also falls under the term Financial Abuse by Family, as outlined by humanrights.gov.au, as although our friend gave verbal consent for his daughter to access his bank account online to pay bills, she clearly is not acting in his best interest, and using his pay to finance her commitments and lifestyle.

In Australia, the penalties for the successful prosecution of fraud can be quite severe, with penalties ranging from 2 to 10 years imprisonment. The prosecution would need to prove that the property (our friend’s money) was acquired by her dishonestly and deceptively. In our conversation, my friend did say that our friend had considered taking his daughter to court, but was concerned about the costs.

In the US, being a federal crime, a successful fraud prosecution can result in a penalty of up to USD$1 mil and a prison sentence of up to 30 years (for bank fraud) and up to 20 years for mail and wire fraud (fraud involving telecommunications or the internet).

What are the Solutions for our Friend?

In Australia, our friend, if he intends to continue to give his daughter access to his account, is replacing his clumsily administered online access to her replaced by a Power of Attorney.

There are two types of these in Australia:

• A General Power of Attorney, which will enable her to act for him in financial affairs — this includes operating on his bank accounts, selling property, and generally spending his money on his behalf. He would be able to place limits on how his funds are spent, when they came into place, and when they ended. It would be effective for as long as he had the capacity for making these decisions himself.
• An Enduring Power of Attorney, would enable her to make decisions on his behalf only in the case of him losing the capacity to make these himself, such as in the case of him suffering from dementia or a stroke.

Based on the conduct displayed to date by the daughter, the first Power of Attorney would be the one to put into place first, with the second to apply if/when our friend loses the capacity to make financial decisions for himself.

This approach would also result in her looking somewhat like this:

In my branch banking career, I witnessed Australian banks, in response to abuse of Powers of Attorney, placing a great amount of vigilance on them. This involved attorneys needing to bring in bills that needed to be paid for relatives, with all withdrawals of funds signed off by bank managers.

I recall one attorney having to have a large (legitimate) withdrawal for his father approved by a regional manager before it could proceed.

This approach resulted in delays and additional paperwork for attorneys but stopped the purchases of “gifts”, such as boats, holidays in Thailand, and Australian Football League Grand Final tickets by spend-happy attornies.

Of course, our friend’s daughter would have to sign a Power of Attorney, which she might do if she was confronted by him (he is a large man) and the conversation is kept icily business-like.

Another option would be that he could contact his bank, to make the following changes to his daughter’s access to his online banking:

• If he hasn’t already, he could give her 3rd-party access, resulting in her having her own login and password to gain entry. This would mean that she would be unable to make changes to it, such as changing the mobile phone number to hers.
• He could change the limit on transfers to external accounts on her profile to 0, thus putting a plug into the drain of his funds. His profile would have a higher limit — of course, this would mean that he would have to pay his own bills…

Likewise, this option will also result in the above expression on his daughter’s face.

In Conclusion…

Thus, there are options for our friend, but he will need to take responsibility for his money, something he is yet to do.

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