Security

Bank customers report rise in sudden account closures

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July 18, 2023

Many bank customers are reporting their accounts are being shut down without warning, and when they attempt to get an explanation, they have little success. Banks do this when they expect fraud, but many times the customers are innocent, according to a report by CBS News.

One bank customer, Elad Nehorai, said his Bank of America account was shut down and the bank claimed it would take 10 to 20 days to resolve the issue. In the meantime, he was unable to pay his bills.

"All of a sudden I find out I'm broke. I can't feed my family and I can't pay any expenses," Nehorai told the news outlet. "It's another one of those situations where you just, How do you deal with this massive bank, this massive power that you have no control over?"

He tweeted about the experience, and the tweet went viral. After CBS interviewed Nehorai in front of his Bank of America branch, the bank decided to transfer his money into another account, but didn't give him any information.

Bank of America later told CBS the FBI had flagged Nehorai's account since a scammer pretended to be him in an email masking scam and asked a client for money.

J.D. Koontz, a banking expert, said account freezing occurs when banks filed Suspicious Activity Reports to regulators. In 2021, banks filed more than 1.4 million reports.

"Banks are always under the watchful eye of the regulators, who will fine them for not doing their job or not protecting consumers," Koontz told CBS News. "And so by freezing or closing someone's account, they don't necessarily get penalized for that, and so they probably tend to err more on the side of caution, which, unfortunately does create hardships for individuals."

Bank of America told the news outlet it tells customers when they open an account that the bank reserves the right to shut down an account at any time, and they can freeze funds if it suspects fraud.