Is it legal for a bank to reopen an account???

Anonymous · ‎07-16-2015

I had a payment scheduled to my credit card via the First Premier site. After scheduling I changed banks and closed my account (and forgot about the scheduled payment). I went into the branch, she gave me my funds, assured me it was closed, and destroyed my debit card so that I could see. I then made a payment from my new bank to First Premier.

The scheduled payment went through with Regions banks today. They reopened my account, AND tacked on some INS fees for good measure. Now I'm negative $155 for a $58 payment.

Is this practice common or legal? I am calling tomorrow to see if they will work with me, however, I am not expecting much.

Burned2manybridgesB4 · ‎07-17-2015

@Anonymous wrote:
I had a payment scheduled to my credit card via the First Premier site. After scheduling I changed banks and closed my account (and forgot about the scheduled payment). I went into the branch, she gave me my funds, assured me it was closed, and destroyed my debit card so that I could see. I then made a payment from my new bank to First Premier.

The scheduled payment went through with Regions banks today. They reopened my account, AND tacked on some INS fees for good measure. Now I'm negative $155 for a $58 payment.

Is this practice common or legal? I am calling tomorrow to see if they will work with me, however, I am not expecting much.

Common situation, that has been around for years, and many years of complaints to follow...

It comes down to the account being closed, but per your bank's T&C (you need to look this up), any action towards the account: deposit, withdrawl, autopay, etc..etc.. will cause the account to "spring back to life."

If your teller was knowlegeable, they should've advised you about this, and your responsibility to advise any that would be affected.

It's like this with some CC companies as well. Closure of card, but you get hit with an autopay....

Get their T&C, and read it.

Anonymous · ‎07-17-2015

Wow, thank you. really doesn't seem like a kosher practice. I spoke with a rep who directed me to some very vague wording in regard to this. Vague or not, it is there in the deposit agreement.

Oh well, drop in the bucket, I suppose.

UncleB · ‎07-18-2015

@Anonymous wrote:
Wow, thank you. really doesn't seem like a kosher practice. I spoke with a rep who directed me to some very vague wording in regard to this. Vague or not, it is there in the deposit agreement.

Oh well, drop in the bucket, I suppose.

Yeah, this practice goes way, way back.

I closed an account with a regional bank in the mid 2000s, and I was concerned of something like this happening as well. As I was closing the account, I told the person at the branch my account number "might" have been compromised - hey, you never know - and I needed to be sure there was no way the account could "come back to life". They claimed they did a 'hard-close' (or something like that) but I'll never know if it made a difference. I had them flag the debit card as 'lost' in their system as well, just in case.

It's been a while since I closed any bank accounts, but the last time I left the old account open for an extended amount of time with a small balance, just in case of any situations like this. I can understand this option isn't ideal for everyone, though.

I will agree it seems this practice is flawed, and I can also see how it could be easily abused. If you wanted to 'throw a wrench' into someone's financial life, just make a small ($5) cash deposit into an account you know to be closed, and watch the fees add up (most accounts have monthly fees without direct deposit or minimum balances). Ugh.

creditnocash · ‎07-25-2015

@Burned2manybridgesB4 wrote:
@Anonymous wrote:
I had a payment scheduled to my credit card via the First Premier site. After scheduling I changed banks and closed my account (and forgot about the scheduled payment). I went into the branch, she gave me my funds, assured me it was closed, and destroyed my debit card so that I could see. I then made a payment from my new bank to First Premier.

The scheduled payment went through with Regions banks today. They reopened my account, AND tacked on some INS fees for good measure. Now I'm negative $155 for a $58 payment.

Is this practice common or legal? I am calling tomorrow to see if they will work with me, however, I am not expecting much.

Common situation, that has been around for years, and many years of complaints to follow...

It comes down to the account being closed, but per your bank's T&C (you need to look this up), any action towards the account: deposit, withdrawl, autopay, etc..etc.. will cause the account to "spring back to life."

If your teller was knowlegeable, they should've advised you about this, and your responsibility to advise any that would be affected.

It's like this with some CC companies as well. Closure of card, but you get hit with an autopay....

Get their T&C, and read it.

thats the key right there.

i always ask, and go through their transactions that were pre-authorized, to make sure.

its legal, and wont get you out of the gym membership that you signed up for but dont go, and they wont let you cancel it .

(i know this wasnt the case here, but some people try to be sneaky)

i would call their customer service department, or even someone whose been at the bank for a while, and ask to get some of the fees rebated.

p.s. i know it sucks to get charged on something you thought was closed, but a nice polite attitude, will get you much farther than yelling at them that banks steal your money.

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DaveInAZ · ‎07-26-2015

@UncleB wrote:
@Anonymous wrote:
Wow, thank you. really doesn't seem like a kosher practice. I spoke with a rep who directed me to some very vague wording in regard to this. Vague or not, it is there in the deposit agreement.

Oh well, drop in the bucket, I suppose.
Yeah, this practice goes way, way back.

I closed an account with a regional bank in the mid 2000s, and I was concerned of something like this happening as well. As I was closing the account, I told the person at the branch my account number "might" have been compromised - hey, you never know - and I needed to be sure there was no way the account could "come back to life". They claimed they did a 'hard-close' (or something like that) but I'll never know if it made a difference. I had them flag the debit card as 'lost' in their system as well, just in case.

It's been a while since I closed any bank accounts, but the last time I left the old account open for an extended amount of time with a small balance, just in case of any situations like this. I can understand this option isn't ideal for everyone, though.

I will agree it seems this practice is flawed, and I can also see how it could be easily abused. If you wanted to 'throw a wrench' into someone's financial life, just make a small ($5) cash deposit into an account you know to be closed, and watch the fees add up (most accounts have monthly fees without direct deposit or minimum balances). Ugh.

Hmm, that's strange, I always assumed when you closed a bank account it was dead and couldn't come back to life on its own. In the summer of 2010 I was heading toward filing BK7, had already retained and PIF the attorney. He advised me to close my bank account and open a new one at a bank none of my creditors knew about, to "avoid potential problems". That was Wells Fargo, I closed it in early June. By July CC companies were calling like mad and Chase was the worst, they used a call center in India that spoofed their caller ID so I couldn't always who it was. It was always the same when I answered one of their calls, the person would ask my permission to charge my bank account of record - Wells Fargo - for the past due amount. I'd tell them "No, that account is closed and I don't have any money to make any payment". Well, what do you expect when you outsource collections to a third world country? At least 4 reps must have claimed I told them "Sure, go right ahead" as I got at least 4 returned item mailings from WF in July & Aug, all attempts by Chase to debit the account for a payment. WF never charged me any fees and the notices always showed the account as closed. I guess it's up to the T&C, but I would think WF would have the T&C as much to their favor as possible.

UncleB · ‎07-26-2015

@DaveInAZ wrote:
@UncleB wrote:
@Anonymous wrote:
Wow, thank you. really doesn't seem like a kosher practice. I spoke with a rep who directed me to some very vague wording in regard to this. Vague or not, it is there in the deposit agreement.

Oh well, drop in the bucket, I suppose.
Yeah, this practice goes way, way back.

I closed an account with a regional bank in the mid 2000s, and I was concerned of something like this happening as well. As I was closing the account, I told the person at the branch my account number "might" have been compromised - hey, you never know - and I needed to be sure there was no way the account could "come back to life". They claimed they did a 'hard-close' (or something like that) but I'll never know if it made a difference. I had them flag the debit card as 'lost' in their system as well, just in case.

It's been a while since I closed any bank accounts, but the last time I left the old account open for an extended amount of time with a small balance, just in case of any situations like this. I can understand this option isn't ideal for everyone, though.

I will agree it seems this practice is flawed, and I can also see how it could be easily abused. If you wanted to 'throw a wrench' into someone's financial life, just make a small ($5) cash deposit into an account you know to be closed, and watch the fees add up (most accounts have monthly fees without direct deposit or minimum balances). Ugh.
Hmm, that's strange, I always assumed when you closed a bank account it was dead and couldn't come back to life on its own. In the summer of 2010 I was heading toward filing BK7, had already retained and PIF the attorney. He advised me to close my bank account and open a new one at a bank none of my creditors knew about, to "avoid potential problems". That was Wells Fargo, I closed it in early June. By July CC companies were calling like mad and Chase was the worst, they used a call center in India that spoofed their caller ID so I couldn't always who it was. It was always the same when I answered one of their calls, the person would ask my permission to charge my bank account of record - Wells Fargo - for the past due amount. I'd tell them "No, that account is closed and I don't have any money to make any payment". Well, what do you expect when you outsource collections to a third world country? At least 4 reps must have claimed I told them "Sure, go right ahead" as I got at least 4 returned item mailings from WF in July & Aug, all attempts by Chase to debit the account for a payment. WF never charged me any fees and the notices always showed the account as closed. I guess it's up to the T&C, but I would think WF would have the T&C as much to their favor as possible.

I feel your pain... I had to close a checking account back in 2000 for the same reason; I had a credit card with the same bank that I was IIBK, and the attorney told me since it was the same bank they could possibly go after my checking to pay the credit account.

As for accounts 'coming back to life', it seems the problem usually comes up when there's a deposit of some type into a closed account, then monthly fees start being assessed without the account owner being aware the account is even reopened.

Also, at the bank I used a few years back their debit cards were handled by their credit card dept., who were even in a different city from the main bank office. I found out "the hard way" there seemed to be a disconnect between the two, and it was not only possible for a debit card to be approved with no money in an account, they were clear at the local branch that this was quite profitable for the bank (OD charges). Of course the law has changed and this now requires 'opting in', but to make sure there's no problem I simply report the card lost before closing the account. That seems to prompt them to put an immediate 'stop' to any further authorizations in case there is a delay in closing the card. An ounce of prevention truly is better than a pound of cure.