by For most of the last year, my inbox has been filled with stories from people like these:
Each person (more than 1,000 wrote to me and my colleague Tara Siegel Bernard) voluntarily told a story about losing bank and credit card accounts and included contact information. It’s not the kind of thing most people do if they have something to hide.
Banks say they need to close accounts they consider suspicious to prevent money laundering, fraud and terrorist financing. And regulators are putting pressure on them to look more closely for signs of dirty dealings.
But there are many frustrating things about this phenomenon: Account closures often occur without warning. There is usually no recourse, appeal or explanation from the bank. Sometimes you discover that you have lost banking privileges when you buy food at the supermarket and your debit and credit cards no longer work.
But losing your bank account isn’t just an inconvenience. It’s scary. If you are a small business, this affects your payroll and can damage your reputation in the community. Without any explanation, one wonders if he has been blacklisted or some kind of government watch list.
A big part of the mystery of these closed accounts is why banks often treat people so callously while scrutinizing their behavior and then showing them the door.
It doesn’t have to work this way. In recent days, I’ve asked Bank of America, Citibank, JPMorgan Chase, and Wells Fargo about specific things they could do to make the eviction process different, without violating any bank security laws.
Wells Fargo declined to comment. The other three offered some glimmers of hope, but no promises that they would make this process easier.
For those who have been shown the door, why would the bank want to calm their nerves? There is no electorate for the financially condemned.
Here are five questions I asked banks and actions I asked them to consider.
1) Most customers don’t read their account agreements and have no idea that they can cancel those accounts at any time. When you contact them to investigate suspicious account activity, why not remind them to convey the seriousness of the matter?
Several times, readers told us they hadn’t taken their banks’ inquiries seriously or found them too intrusive. But many bank customers don’t realize that they lack an inalienable right to bank with any given company. They also do not understand that banks have a legal obligation to know your clients.
Customers may not understand that every time the bank makes contact, they could be kicked out if investigators don’t like what they hear. Therefore, they should take the bank’s call seriously immediately.
Bill Halldin, a spokesman for Bank of America, said the bank sometimes makes clear how much is at stake during these types of conversations. Jerry Dubrowski, a spokesman for JPMorgan Chase, said in a statement that the bank “typically sends a letter to the customer explaining that we need to hear from them to keep the account open.”
2) So, especially this paper mail. Banks often request additional information about customers in this way, and only in this way. The same thing happens when they inform people that their accounts will be closed. If your US mail service is unreliable, if you throw away bank mail that looks like a request, or if you travel a lot or don’t open your mail often, you won’t see the letter.
So why not surprise people with paper letters, phone calls, text messages, and flashing alerts with simultaneous giant fonts on banking apps and websites? Launch an all-point bulletin, given the seriousness of these issues.
Banks didn’t have a good answer to this question, but Chase offered some hope. “We are looking for ways to expand our digital reach,” Dubrowski said. Citi uses “all available communication methods,” a spokesman, Colin Wright, said in a statement.
3) We have heard from many people who have been customers for decades, bank employees or retirees who have lost their accounts. Are humans really paying much attention to who exactly these people are?
My favorite correspondent this year is Ignazio Angeloni, who opened an account at Bank of America when he came to the United States in 2019 to work as a senior researcher at Harvard. At one point, he led the operation at the European Central Bank that assessed the stability of more than 100 banks.
The New York Times profiled him in 2013. It’s the kind of thing a low-level security analyst searching the Internet would find in about 30 seconds.
But shortly after Mr. Angeloni opened his account, he received his own Dear John letter. The bank didn’t tell him why, and his complaint to the Consumer Financial Protection Bureau went nowhere.
What gives? “Our policy includes a more thorough review of accounts held by non-U.S. government officials, based on a number of risk factors,” Halldin said in a statement.
Angeloni said he couldn’t think of any risk factors that might have upset the bank.
4) Banks often (but not always) feature something called Suspicious activity report to the federal government when customers set off alarms. Institutions cannot tell a client whether they have submitted such a report or even imply so.
But why can’t banks tell people why they are prohibited from having a checking account when they haven’t filed one of those reports? Hundreds of readers who lost their accounts left bewildered.
It is understandable that there may be confusion on this matter.
At a recent Senate Banking Committee hearing, Sen. Laphonza Butler, D-Calif., disputed Citi CEO Jane Fraser on our November article on sudden account closures.
“We have money laundering requirements that are very significant, where we are not allowed to go and then tell the customer why we have closed their account,” Ms Fraser said. “And I think we all appreciate how frustrating that is for our customers, but we have to follow the law.”
The “not allowed” part is true when the bank has filed a Suspicious Activity Report. But is it true when it is not? “The circumstances under which banks are prohibited from disclosing information are not limited to a SAR filing,” said Wright, the Citi spokesman. He declined to comment further on the scope of the ban.
“Jane’s testimony should not be interpreted to mean that banks can never tell a customer why an account was closed,” he added.
If your Citi accounts are closed in the future, take that quote to your employees if they don’t want to explain why you were closed.
5) Most Dear John letters from banks are vague at best. Will you never be able to have another Chase Sapphire or Citi AAdvantage credit card once the bank has closed your checking and credit accounts for unknown reasons? Will you be able to get a mortgage from the bank again? The cards generally don’t say so.
Additionally, banks make no guarantees about whether a closed checking account will prevent you from opening another bank account elsewhere. They also don’t tell you if you’ll end up in any federal databases that could cause you to be audited by the Internal Revenue Service, lose your TSA PreCheck membership, or face some other punishment.
Why not make this clear so that people don’t live with acute anxiety as they try to quickly open new accounts elsewhere, and the low-grade variety as they go about their business for years to come?
Bank of America and Citi were basically silent on the matter. Chase responded.
“Chase does not and cannot assure consumers what will or will not happen in their interactions with third parties after an account is closed because Chase does not control those third parties and does not want to provide potentially inaccurate information to consumers,” Mr. Dubrowski said. . saying. “It is possible that the reasons underlying closing an account (for example, fraud or other illegal activity) could have other effects.”
Fair enough, but there’s nothing stopping banks from offering something like these guarantees, which according to our year of reporting are almost always true:
“Since we have only closed your checking account, we do not expect this to affect your credit report.”
“Since he was not overdrawing his account or bouncing checks frequently, we have not reported it to ChexSystems either Early warning services. (Negative reports there may prevent you from getting a new bank account elsewhere).”
“We have not reported it to the IRS, the Transportation Security Administration or any state database that could create problems when you apply for business licenses or when police officers search for you during traffic stops.”
And nothing stops our elected representatives or banking regulators from forcing banks to better inform their customers after an exit.
Along those lines, many readers have reported filing complaints with the Consumer Financial Protection Bureau and concluding that the regulator had no power to force banks to say or do anything about account closures and the processes surrounding them.
But it’s not as if the office has done nothing in similar circumstances.
Last year, as part of a $3.7 billion investment coercive action v. Wells Fargo, reprimanded the bank for using an overly sensitive automated system to detect suspicious deposits and then freezing the customer’s entire account, along with any other accounts, for at least two weeks. The bank would then close the accounts and finally return the money. Wells Fargo paid more than $160 million to repair more than a million people affected by the freeze and agreed to use less severe tactics.
The bureau continues to examine these issues and is seeking more reports of people who have been kicked out of their banks. “Consumer complaints are an extremely useful source of intelligence that we use to identify problems in the marketplace and help inform our law enforcement work,” said Eric Halperin, the bureau’s law enforcement director, in a release.
Let this serve as an invitation for all innocent people whose accounts have been closed to flood the office with such reports.
Channeling anger toward the consumer office may be little consolation, but it’s what we’re left with for now. After all, “Never bank like a criminal again” is tough advice to take when you have no idea what caused the bank to evict you in the first place.
