Recourse Against Bank for Freezing My Funds Due to My Filing a Lawsuit Against Them

[darlingm]

OK, so I've learned if you're going to sue someone, to make sure they don't have anything of yours. I didn't think it would be an issue with a nationwide bank...

On 5/11/2009, I made an online order. The company made an error and authorized my debit card twice. They immediately caught their mistake, and voided the second authorization. (This second authorization vaporized into thin air, just like the $1.00 authorizations you see from a gas station when you swipe at the pump. My bank statements don't show the second charge - there was NOT a second and a credit to make it balance out.)

This second authorization that never posted to my account "overdrew" my checking account and caused $269 in NSF fees. The overdraw was entirely due to this mistake - without it, my balance was fine. The company was on the other side of the country, so I decided to pursue my bank for the NSF fees since they advertise their customers aren't liable for unauthorized transactions.

I got bumped up the chain several times within customer support, eventually getting to a special case review department that reports to the CEO's office, and is outside the general customer service structure. Every step along the way, my bank's stance was that there was no unauthorized transaction since the second authorization was voided and never charged, so their zero liability policy didn't apply. (Yet, there was enough of a "transaction" to charge $269 in NSF fees.)

After even this special case review department wouldn't refund the charges, I filed a small claims lawsuit.

On 8/4/2009, my bank's legal department informed me they would be settling my lawsuit in full, and sending me a check shortly. I received their check on 8/19/2009. The next day, on 8/20/2009, I received a letter from my bank stating: "We pride ourselves on providing legendary service. Because of this, XXX Bank routinely reviews customer accounts. Recently, we received the above referenced account(s) and have concluded that we no longer are able to maintain our banking relationship with you. Effective immediately, all the deposit accounts listed above with XXX Bank are closed. We will be mailing you a cashier's check for any remaining balance(s). This check will be mailed to you at the address indicated in our records at the close of business on Aug 31, 2009. For your security, do not write checks against your checking account(s) as they will be returned unpaid."

When I received the letter, I already had 14 checks outstanding with sufficient funds in the checking account to cover them.

Upon contacting my bank, I was told the account closing was being delayed by an additional month, until October 5, 2009, and there was a permanent hold on all funds that were in the account. She said even though the funds in the account had been in there for a long time (and were even immediately available cash deposits), that any checks presented to my account that I had written before receiving their letter would be returned as NSF.

I explained to them the hardship this was causing. I was going to bounce thousands in dollars of checks to 14 places (I contacted all of them, and only several of them hadn't yet deposited the checks.) This was going to generate fees at my bank, and at the bank the checks were deposited at. Even worse, my bank wouldn't let me withdraw the available cash in my account for 35 days, so I wouldn't be able to cover all the payments that were about to bounce.

Their stance was that since they were closing my account, they had to hold my funds until all activity had stopped on the account, so they'd know what amount to give me. I tried explaining to them that the amount in my account should be given to me, since they weren't going to allow withdrawals or payments from the account, and any fees that generated from here on weren't my fault, but this argument fell on deaf ears.

After nonstop complaining for days, they eventually let me withdraw everything on 8/26/2009. However, all my oustanding checks were returned. They didn't return as NSF, they returned as "Code S - Refer to Maker" which apparently is typically used when a bank believes the check is fraudulent.



I'm pretty sure I have legal recourse against my (former) bank for the NSF fees I had to pay everyone who had one of my checks returned.

I understand a business has a right to stop doing business with a customer, but I'm wondering if I have additional recourse against their retribution against me for exercising my rights to file a lawsuit, and pulling a move like this out of a settlement of a small claims case, and not stating at the time of settlement that they would be closing my account?

Do I have additional recourse against them under funds availability laws, since they took cash that had been in the account for a long time that was previously available, and put a hold on them because THEY were choosing to close the account?

[Mr. Knowitall]

It's routine for banks to hold funds in checking accounts when the account is closed, such that outstanding checks don't bounce. The extent to which they can hold your funds and the duration of the hold should be spelled out in your contract with the bank for the account that was closed, so you will need to review the terms of that contract. They do not have to retain you as a customer.

[darlingm]

It's routine for banks to hold funds in checking accounts when the account is closed, such that outstanding checks don't bounce. The extent to which they can hold your funds and the duration of the hold should be spelled out in your contract with the bank for the account that was closed, so you will need to review the terms of that contract. They do not have to retain you as a customer.

I would have generally understood, if they held the funds when THEY closed the account, such that outstanding checks DIDN'T bounce.

However, they held the funds when THEY closed the account, such that outstanding checks WOULD bounce even though available cash deposit funds were there for them.