Perhaps you moved to a new town, which your old bank doesn't serve. Or maybe you simply wanted better customer service and/or lower prices. So, you completed the time-consuming research to find a new bank, opened an account at a new bank, moved your money over, and paid any fees while closing your account at the old bank. Unfortunately, your old bank may not be finished with you.
Some consumers have reported instances where their old bank re-opened previously closed accounts, typically referred to as "zombie bank accounts." These accounts are difficult to kill and they incur lots of expensive fees, without any notice or consent to consumers.
How could this happen? Consumer Reports investigated and found that:
"... two of the nation's 10 largest retail banks, bank of America and Chase, reserved the right to reopen a closed account if there was a subsequent deposit; and Bank of America might also reopen an account after an attempted withdrawal."
Apparently, Wells Fargo bank also reserves the right to reopen previously closed bank accounts.
"Zombie bank accounts" is the latest in a long line of ill-conceived, customer unfriendly attempts by companies to ignore consumers' explicit requests: zombie cookies, zombie databases, and zombie e-tags. Now, it's the banks' turn again after the huge interest-rate hikes. and transaction manipulations to increase fee revenues during 2009.
Of course, a closed account should remain closed -- and the bank should reject both attempted deposits and attempted withdrawals at the old account. Otherwise, chaos results.
In October 2011, Congressional representative Brad Miller (North Carolina) proposed legislation to both make it easier for consumers to switch to another bank, and to prevent the zombie banking practice. 32 Congressional representatives, including Michael Capuano (MA), Judy Chu (CA), John Conyers (MI), Louise Slaughter (NY), and John Tierney (MA) have co-sponsored the bill, H.R. 3077, which is currently in subcommittee. Write to your elected officials and tell them to support this bill -- that "closed means closed" for bank accounts.
The fact that banks practice zombie bank accounts, and that corrective legislation is required, both say a lot about the banking industry's ethics (or lack thereof). Meanwhile, experts advise consumers:
- Review your bank's customer agreement,
- Discuss the bank's reopen account policy with a bank representative, and get it in writing before closing a bank account, and
- Submit complaints to the Consumer Financial Protection Bureau (CFPB)
In March 2012, the CFPB began accepting complaints from consumers about checking and savings accounts. And, the agency has helped some consumers close zombie bank accounts.
Has your old bank open a zombie bank account? If so, share your experience below. Please name the bank, and whether you filed a complaint with the CFPB.