Has your bank account been closed? You aren’t alone.

Nick Sarvari UnSplash

Banks appear to be hypersensitive to suspicious transactions

Often the news comes out of the blue, with little notice. Sometimes there is no notice at all. Suddenly, a debit card doesn’t work.

In recent weeks, bank customers have reported that their bank has unilaterally closed their accounts, causing delays in paying bills. The reasons vary.

The New York Times has analyzed about 500 instances of what banks call “exiting” an account and found that it often happens when the account holder has made an unusual transaction, setting off the bank’s security apparatus. 

Banks, working with federal regulators, are constantly looking for signs of suspicious activity that might be linked to fraud, money laundering and even terrorism. As a bank errs on the side of vigilance lots of innocent bank customers may find their accounts closed.

“We want to build long-term relationships with our clients, which is why accounts are closed only after appropriate review and consideration of the facts,” Jerry Dubrowski, a spokesman for JPMorgan Chase, told the Times, which reported receiving nearly 200 complaints from Chase customers.

Other reasons

But there may be other reasons for a bank to suddenly close a customer’s account. In the spring of 2020, as the COVID-19 pandemic threatened economic as well as health damage, banks began unilaterally closing customers checking and credit card accounts as a way to reduce risk.

There is no evidence that is a reason for the wave of recent account closures, but Denise, a Capital One customer from Jacksonville, Florida, told us her credit card account was suspended after she was late paying her bill, even though she paid the balance in full.

“I have been a good customer, with multiple accounts, but never had an account closed,” Denise wrote in a ConsumerAffairs review. “This one is not closed either, but I can’t use it. I am beyond upset and extremely disappointed in Capital One.”

Other issues

Meanwhile, major bank customers were puzzled Friday when their banks – including Bank of America, Truist, Wells Fargo and Chase, all were unable to accept deposits. The Federal Reserve attributed the problem to an industry-wide outage that it was was resolved by Friday afternoon.

According to the Fed, the problem was traced to a private sector automated clearing house (ACH) operator. The glitch “resulted in a number of ACH entries having certain data elements obscured,” the central bank said. 

As a result, some deposits could not be processed by the receiving depository financial institutions.”

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