Asset Searches : What Are They and What's Legal?

Our clients frequently ask us if we to do "Asset Searches." The answer is definitely, yes we do. But that question is always followed by two other questions from us:

  • "What is the reason for the asset search?" and
  • "What kind of assets are you looking for?"

The answers we get to the first question include:

  • Attorneys may have clients who are attempting to collect on a judgment.
  • Other attorneys and their clients may be contemplating suing but want to find out in advance of a judgment whether or not the other party has assets to levy on. Companies often need to verify potential business partners' financial-worth.
  • Both businesses and individual investors may want to ascertain the financial status of the people or companies they're thinking of investing in.
  • And, of course, creditors need to check the financial stability of potential debtors.

When answering the second question above, most clients tell us they want us to find out if the subject owns real property. Real property is searchable through several proprietary databases we have, as well as at the individual county recorder's office where we suspect the subject might have property. We can do real property searches nationwide and also find the net equity of the property, if requested.

In some, rarer, cases, clients want us to find any and all assets. This includes personal property such as automobiles, boats, airplanes; collectible assets, such as art, antiques, stamps, coins, and jewelry; and off-shore assets. And, of course, it includes financial assets such as bank and brokerage accounts. Personal property is easier for us to find in some states than in others, but we are usually able to find most of these assets, though they may not be worth as much as real property and financial assets. Collectible assets and off-shore accounts are the most difficult types of assets to locate, but there are some methods of locating them in cases where a lot of money is at stake.

Financial assets are therefore, along with real estate, the most common types of assets we are asked to locate. The question regarding financial assets that we often get from our clients is: "Is it legal to obtain banking information?"

The answer to that is: In many circumstances it is legal, but it depends on the purpose for the search, the kind of information obtained and the method of doing the search.

Bank Searches

To understand what is legal about bank searches and what isn't, we need to take a careful look at the Financial Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act (GLBA). (The GLBA applies to individual consumers or customers only, not to business or commercial accounts.) There are two principal parts to the privacy requirements in the act that prevent banks and other financial institutions from divulging individual account information: the Financial Privacy Rule and the pretexting provisions. (Another privacy requirement, the Safeguards Rule, is about maintaining records and is not relevant to obtaining bank information.) Before we can do any bank searches for our clients, we have to carefully consider whether on not we are complying with these provisions of the GLBA.

Financial Privacy Rule

This part of the GLBA sets forth the kinds of protections that a bank or any other financial institution must implement to make sure that consumer information is safeguarded. An important part of this rule is that it is never permissible for a bank to release the account number of a bank checking, savings or brokerage account.

The Financial Privacy Rule also outlines the "permissible purposes" for which it is legal for the bank to release some information about an individual's account. The permissible purposes that allow us to obtain the information are:

  • To protect against actual or potential fraud, unauthorized transactions, claims or liability. This permissible purpose can apply to individuals or companies who are contemplating doing business with someone and want to assure themselves that what is being represented to them is accurate and not fraudulent (protect against/ prevent potential fraud).
  • Required institutional risk control. This provision allows us to obtain information when one when one business is contemplating doing business with another business or when a business is contemplating litigation against a consumer.
  • As necessary to effect, administer or enforce a transaction requested or authorized by the consumer. This provision applies when one party is attempting to collect debts incurred by the consumer (enforce a transaction requested or authorized by the consumer but subsequently defaulted on.)
  • Persons with a legal or beneficial interest re: consumer. As with #3 above, this provision applies when we are seeking banking information for someone who already has a judgment (legal interest) and is trying to collect on that judgment.

Pretexting Provisions of GLBA

The pretexting provision of GLBA makes it expressly illegal to utilize a consumer's personal identifying information in order to represent oneself to a financial institution as being the consumer (impersonating him or her). Some investigative agencies use this method to obtain bank information, and it is blatantly illegal. We do not use that method. Be careful of doing business with companies who do.

The Bottom Line on Financial Assets

So, in summary, when a client calls and asks if obtaining bank information is legal, we first always ask for the reason for the asset search. If our client's reason for the search falls within one of the above permissible purposes of the GLBA, then there is no prohibition on our searching for information regarding an individual's banking information. When we give our report, however, we can never provide the number of any particular account maintained by the subject of the search, but we can provide the name of the bank or institution, the location of the bank and the account balances. The account number provision is not a hindrance in collection efforts since, as our attorney clients know, ALL writs served should state "any and all accounts" held by the banking institution where the levy is served rather than specify a particular account.

In today's world, it is important for those who have been defrauded or who have been the victim of scam artists or chronic debtors to have the ability to protect themselves and collect on their judgments. We are happy to be able to offer a legal way to help through asset searches.

Please call us today with any questions or comments you may have about this very important issue!

Copyright Notices © 2024 Parrent Smith Investigations and Research. All rights reserved.