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 — volunteered a story of losing bank and credit card accounts and included contact information. It’s not something most people usually do if they have something to hide.
Banks say they must close accounts they suspect to prevent money laundering, fraud and terrorist financing. In addition, regulators are pushing them to sniff harder for signs of dirty dealing.
But there are several frustrating things about this phenomenon: Account closures often happen without warning. There is usually no appeal, recourse or explanation from the bank. Sometimes you find you’ve lost your banking privileges when you buy food at the grocery store and your debit and credit cards no longer work.
But losing your bank account isn’t just inconvenient. It’s scary. If you’re a small business, it disrupts your payroll and can damage your reputation in the community. Without any explanation, you wonder if you’ve been blacklisted or put on some kind of government watch list.
A big part of the mystery with these closed accounts is why banks often treat people with such casual insensitivity as they scrutinize their behavior and then show them the door.
It doesn’t have to work that way. Over the past few 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 to make this process any easier.
For those who have been shown the door, why would the bank want to soothe their jittery nerves? There is no constituency for the financially hell-bent.
Here are five questions I asked the banks — and the actions I asked them to consider.
1) Most customers do not read their account agreements and have no idea that you can cancel these accounts at any time. When contacting them to investigate suspicious account activity, why not remind them of this to convey the seriousness of the matter?
Many times, readers told us that they didn’t take their banks’ questions seriously or that they found their questions too annoying. However, many bank customers do not realize that they do not have an inalienable right to bank with any particular company. Nor do they understand that banks have a legal obligation to know their customers.
Customers may not understand that every time the bank gets in touch, it could kick them out if they don’t like what they hear from investigators. So they should take the bank’s call seriously immediately.
Bill Halldin, a Bank of America spokesman, said the bank sometimes makes clear how high the stakes are during such conversations. Jerry Dubrowski, a spokesman for JPMorgan Chase, said in a statement that the bank would “typically send the customer a letter explaining that we need to hear from them in order to keep the account open.”
2) So about all that paper mail. Banks often request additional information about customers this way — and only this way. Same when they inform people that their accounts will be closed. If your US mail service is not reliable, if you send bank mail that looks like an invitation, or if you travel a lot or don’t open mail often, you won’t see the letter.
So why shouldn’t people be bombarded with simultaneous paper letters, phone calls, messages and notifications in giant flashing fonts on banking apps and websites? Create a bulletin with all points given the seriousness of these issues.
Banks didn’t have a good answer to that question, but Chase offered some hope. “We’re looking for ways to expand our digital reach,” Mr. Dubrowski said. Citi is using “all available methods of communication,” spokesman Colin Wright said in a statement.
3) We have heard from many people who are customers of decades, bank employees or retirees who have lost their accounts. Do human beings really care who exactly these people are?
My favorite correspondent this year is Ignazio Angeloni, who opened a Bank of America account when he arrived in the United States in 2019 to serve as a senior fellow 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 something a low-level security analyst searching the Internet would find in about 30 seconds.
But not long after Mr. Angeloni opened his account, he got 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 increased review of accounts held by non-U.S. government officials, based on certain risk factors,” Mr. Halldin said in a statement.
Mr. Angeloni said he could not think of any risk factors that might have troubled the bank.
4) Banks often — but not always — submit something called a Report suspicious activity to the federal government when customers trigger alarms. Institutions cannot tell a customer whether they have made such a report or even indicate it.
But why can’t banks tell people why they are banned from having a checking account when they haven’t submitted one of these reports? Hundreds of readers who lost their accounts were left shocked.
It is understandable that there may be confusion on this matter.
At a recent Senate Banking Committee hearing, Sen. Laphonza Butler, D-Calif., asked Citi CEO Jane Fraser about our November article on sudden account closures.
“We have money laundering requirements that are very important, which we are not allowed to go to and then tell the customer why we have closed their account,” Ms Fraser said. “And I think we all appreciate how frustrating this is for our customers, but we have to follow the law.”
The “not allowed” part applies when the bank has submitted a Suspicious Activity Report. But is it true when it doesn’t have? “The circumstances under which banks are prohibited from disclosing are not limited to a SAR filing,” said Mr. Wright, the Citi spokesman. He declined to comment further on the extent of the ban.
“Jane’s testimony should not be interpreted to mean that banks can never tell a customer why an account has been closed,” he added.
If your Citi accounts are closed in the future, take this offer to their employees if they don’t discuss why you were closed.
5) Most of the banks’ Dear John letters are vague at best. Can you never get another Chase Sapphire or Citi AAdvantage credit card after the bank closes your credit and checking accounts for anonymous reasons? Can you get a remortgage from the bank? Letters generally do not tell.
In addition, banks provide no assurance as to whether a closed checking account may prevent you from opening another bank account elsewhere. Nor do they tell you if you’ll end up in a federal database 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 it clear so people don’t live with intense stress as they try to quickly set up new accounts elsewhere — and the low-quality variety as they do their business in the years to come?
Bank of America and Citi have been virtually silent on this. Chase replied.
“Chase does not and cannot assure consumers what will or will not happen in third-party interactions after account closure because Chase does not control these third parties and does not want to provide consumers with potentially inaccurate information,” Mr. Dubrowski said. “It is possible that the reasons for closing an account (for example, fraud or other illegal activity) may have other effects.”
Fair enough, but there’s nothing stopping banks from providing something like these assurances, which our reporting year has shown to be almost always true:
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“Since we have only closed your bank account, we do not expect this to affect your credit report.”
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“Since you did not overdraw your account or bounce checks frequently, we did not report you to ChexSystems or Early Warning Services. (Bad reports there can prevent you from getting a new bank account elsewhere.)”
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“We have not reported you to the IRS, the Transportation Security Administration, or any government databases that could cause problems when you apply for business licenses or when police officers search you during traffic stops.”
And there is nothing to prevent our elected representatives or bank regulators from forcing banks to better inform their customers after an exit.
On that note, many readers reported filing complaints with the Consumer Financial Protection Bureau and concluding that the regulator was powerless to force banks to say or do anything about account closures and the processes surrounding them.
But it’s not like the office hasn’t done anything in similar circumstances.
Last year, as part of a $3.7 billion enforcement action against Wells Fargo, it convicted the bank of using an overly sensitive automated system to detect suspicious deposits and then freezing a customer’s entire account, along with other accounts, for at least two weeks. The bank would then close the accounts and eventually return the money. Wells Fargo paid more than $160 million to restore customers to more than a million people affected by the freezes and agreed to use less stringent tactics.
The bureau continues to look into these problems and is seeking more reports from people who have been evicted from their banks. “Consumer complaints are an extremely useful source of information that we use to identify problems in the marketplace and help inform our law enforcement work,” Eric Halperin, the bureau’s director of enforcement, said in a statement.
Let it serve as an invitation to all innocents whose accounts have been closed to flood the office with such reports.
Channeling your rage at the consumer bureau may be cold comfort, but it’s what you’re left with for now. After all, “Never bank like a criminal again” is tough advice to swallow when you have no idea what made the bank kick you out in the first place.