Customer Address Changes and Use of P.O. Boxes

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January 28, 2002

 

Because scams have been perpetrated by establishing a bogus address or P.O. box for customer accounts, this Alert is to remind members of the importance of supervising customer address changes and of P.O. box use. A number of approaches can limit the potential for problems:

• Independent Monitoring
  A system for independent — separate from the sales and service functions — monitoring of account addresses and changes has been a successful supervisory and customer protection tool for firms.
  
  
• Address Verification
  Firms are encouraged to monitor address changes diligently and to verify them directly with the customer, either in writing to the existing and new addresses, in person or by phone.
  
  
• PO Boxes Discouraged
  Use of P.O. boxes for customer communications is often discouraged or permitted only with firm approval or verification by the customer.
  
  
• No Firm Addresses
  Generally firms should not permit customer statements or confirmations to bear the address of the firm or any of its employees.
  
  
• C/O Addresses
  Firms should be attentive when opening accounts and when changing addresses that are established "C/O" (in care of) a third party.
  
  
• Exception Reports
  Computer-generated exception reports are also a useful tool in spotting trends among RRs or branch offices, such as watching for multiple changes of address by any customer, many changes of address by particular RRs or branches, or the use of the same address for unrelated customers.
  
  
• Protecting Blank Forms
  Firms should also ensure that blank confirmations and customer statements are maintained in a secure location to prevent potential misuse.