For most of the last year, my inbox has been full of stories from people like these:
Each person — more than 1,000 wrote to me and my colleague Tara Siegel Bernard — volunteered a story about losing bank and credit card accounts and provided contact information. This is not something most people usually do when they have something to hide.
Banks say they must close suspicious accounts to prevent money laundering, fraud and terrorist financing. In addition, regulators are putting pressure on them to be more on the lookout for signs of dirty dealings.
But there are many frustrating things about this phenomenon: account closures often occur without warning. As a rule, there is no recourse, objection or explanation from the bank. Sometimes while grocery shopping at the supermarket, you realize that you have lost your banking privileges and your debit and credit cards no longer work.
But losing your bank account isn't just inconvenient. Its scary. If you are a small business, this affects your payroll and can damage your reputation in the community. Without explanation, you wonder if you're blacklisted or placed on some sort of government watchlist.
A big part of the mystery surrounding these closed accounts is why banks often treat people with such casual indifference as they examine 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 bank security laws.
Wells Fargo declined to comment. The other three offered some glimmers of hope but did not promise that they would make this process any easier.
Why would the bank want to reassure those who were thrown out? There is no constituency for the financially damned.
Here are five questions I asked banks – and the actions I would like them to consider.
1) Most customers don't read their account agreements and don't know that you can cancel these accounts at any time. If you're contacting them to investigate suspicious account activity, why not remind them to emphasize the seriousness of the matter?
Readers told us several times that they did not take their banks' inquiries seriously or found their questions too intrusive. However, many bank customers do not realize that they do not have an inalienable right to bank with a particular company. They also don't understand that banks are legally obliged to know their customers.
Customers may not understand that the bank can kick them out every time they make contact if investigators don't like what they hear. Therefore, you should take the bank's call seriously immediately.
Bill Halldin, a spokesman for Bank of America, said the bank sometimes makes clear how high the stakes are in such conversations. Jerry Dubrowski, a spokesman for JPMorgan Chase, said in a statement that the bank “typically sends the customer a letter explaining that we need to hear from them to keep the account open.”
2) So about all that paper mail. In this way – and only in this way – banks often request additional information about their customers. The same goes when they inform people that their accounts are being closed. If your U.S. Postal Service is unreliable, if you throw away bank mail that looks like a solicitation, if you travel a lot, or don't open the mail often, you won't see the letter.
So why not whip people into a frenzy with simultaneous paper letters, phone calls, text messages and flashing alerts in giant fonts on banking apps and websites? Given the seriousness of this matter, prepare a comprehensive bulletin.
Banks didn't have a good answer to that question, but Chase offered hope. “We are looking for ways to expand our digital reach,” Mr. 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 people really paying close attention to who these people are?
My favorite correspondent this year is Ignazio Angeloni, who opened an account with Bank of America when he came to the US in 2019 to work as a senior fellow at Harvard University. At one point he led the operation at the European Central Bank that assessed the stability of over 100 banks.
The New York Times profiled him in 2013. This is something a low-level security analyst would find in about 30 seconds while searching the Internet.
But not long after Mr. Angeloni opened his account, he received his own Dear John letter. The bank wouldn't tell him why, and his complaint to the Consumer Financial Protection Bureau went nowhere.
What gives? “Our policies include increased review of accounts held by non-U.S. government officials based on a number of risk factors,” Mr. Halldin said in a statement.
Mr. Angeloni said he could not think of any risk factors that could have worried the bank.
4) Banks often – but not always – file something called “a.” Suspicious Activity Report to the federal government if customers raise the alarm. The institutions cannot tell a customer whether they have made such a report or even provide any indication of this.
But why can't banks tell people why they're being barred from having a checking account if they haven't filed any of these reports? Hundreds of readers who lost their accounts were left confused.
It is understandable that there is confusion on this matter.
At a recent Senate Banking Committee hearing, Senator Laphonza Butler, Democrat of California, asked Citi CEO Jane Fraser about our November article about sudden account closures.
“We have very important anti-money laundering regulations where we are not allowed to tell the customer why we have closed their account,” Ms Fraser said. “And I think we all know how frustrating this is for our customers, but we have to follow the law.”
The “not allowed” part applies if the bank has filed a suspicious activity report. But is it true if this is not the case? “The circumstances in which banks are prohibited from disclosing are not limited to filing a SAR,” said Mr. Wright, the Citi spokesman. He declined to comment further on the extent of the ban.
“Jane's statement 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, forward this offer to employees if they do not want to discuss why they closed you.
5) Most Dear John letters from banks are vague at best. Can you never have a Chase Sapphire or Citi AAdvantage credit card again if the bank closed your credit and checking accounts for unknown reasons? Can you ever get a mortgage from the bank again? The letters generally don't say it.
Additionally, banks offer no assurances as to whether a closed checking account may prevent you from opening another bank account elsewhere. They also don't tell you whether you'll end up in any federal database, which could result in you being audited by the Internal Revenue Service, losing your TSA PreCheck membership, or facing some other penalty.
Why not make that clear so that people don't live with acute anxiety as they try to quickly set up new accounts elsewhere – and with the inferior option as they go about their business in the years to come?
Bank of America and Citi remained essentially silent on the matter. Chase responded.
“Chase cannot provide consumers with any assurances about what will and will not happen in their interactions with third parties following an account closure because Chase does not control these third parties and does not want to provide consumers with potentially inaccurate information,” Dubrowski said. “It is possible that the underlying reasons for account closure (e.g. fraud or other illegal activity) could have other implications.”
That's fine, but nothing stops banks from making things like these assurances, which our reporting year has shown to be almost always true:
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“Because we have only closed your checking account, we do not expect this will impact your credit report.”
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“Because you did not overdraw your account or cash checks frequently, we did not report you to ChexSystems or Early Warning Services. (Negative reports there may discourage you from opening a new bank account elsewhere.)”
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“We have not reported you to the IRS, the Transportation Security Administration or other government databases that could cause problems when you apply for a business license or when law enforcement officers track you down during traffic stops.”
And nothing stops our elected officials or banking regulators from forcing banks to better inform their customers after an exit.
With this in mind, many readers have reported that they have filed complaints with the Consumer Financial Protection Bureau and concluded that the regulator is unable to force banks to say or agree to account closures and the associated processes company.
But it's not as if the office wouldn't have done anything in similar circumstances.
Last year, the bank was penalized in a $3.7 billion enforcement action against Wells Fargo for using an overly sensitive automated system to detect suspicious deposits and then seizing the customer's entire account, as well as all other accounts for at least frozen for two weeks. Then the bank would close the accounts and eventually pay the money back. Wells Fargo paid more than $160 million in customer remedial measures to over a million people affected by the freezes and agreed to use less severe tactics.
The office continues to investigate these issues and seek additional reports from people who have been kicked out of their banks. “Consumer complaints are an extremely useful source of information that we use to identify problems in the marketplace and inform our law enforcement work,” Eric Halperin, the bureau’s chief of law enforcement, said in a statement.
This should be an invitation to all the innocent people whose accounts have been closed to flood the office with such reports.
Directing anger at the consumer agency may be little consolation, but that's what you're left with for now. Finally, “never bank like a criminal again” is tough advice if you have no idea what caused the bank to turn you away in the first place.