B of A has said it will stop reopening previously closed accounts when it receives an electronic debit or credit for the account. These so-called "zombie accounts" can generate unexpected charges and penalties for unwary customers.
Removing zombie accounts
An announcement from Bank of America said that there are some accounts that have been closed but still get electronic transactions sometimes. These accounts will no longer be revived.
In May, a Consumers Union post pointed out the "zombie account" practice and said it should stop. It said that customers do not have the choice to switch accounts when these kinds of things take place.
When a bank reopens a dead account without telling the account holder, it can leads to unpredicted penalties and maintenance fees, sometimes amounting to hundreds of dollars. According to Consumers Union, the publisher of Consumer Reports, B of A and Chase are the only two large banks practicing the "resurrection" of old accounts. And now BofA is off the grid.
Issue because of customers
Betty Riess, a spokesperson for B of A, pointed out the issue can occur when consumers are not sufficiently diligent when switching banks:
"As always, we remind customers to allow time for outstanding items to clear the account, and make changes to automatic payments and credits before closing the account."
About 20 percent of American customers decided they wanted to switch banks during the last year, but 63 percent of them said they were too concerned about switching electronic payments to do anything about this, according to Consumer Reports. This was what occurred after B of A publicized its charges for having a debit card.
Just the tip of the iceberg
According to Consumers Union staff attorney Suzanne Martindale, the step is good, but there is more out there:
"While this is a welcomed change in policy, consumers at Bank of America and other banks continue to face a myriad of obstacles that can make switching to a new financial institution a time-consuming mess. That's why we need Congress and the Consumer Financial Protection Bureau to enact reforms that make it easier for consumers to move their money."
In order to make it easier for customers to switch banks, the Consumer Financial Protection Bureau is considering brand new policies for banks. This could consist of adoption of portable account numbers that can transfer between banks, prohibiting unfair penalties and reducing check hold times.
Removing zombie accounts
An announcement from Bank of America said that there are some accounts that have been closed but still get electronic transactions sometimes. These accounts will no longer be revived.
In May, a Consumers Union post pointed out the "zombie account" practice and said it should stop. It said that customers do not have the choice to switch accounts when these kinds of things take place.
When a bank reopens a dead account without telling the account holder, it can leads to unpredicted penalties and maintenance fees, sometimes amounting to hundreds of dollars. According to Consumers Union, the publisher of Consumer Reports, B of A and Chase are the only two large banks practicing the "resurrection" of old accounts. And now BofA is off the grid.
Issue because of customers
Betty Riess, a spokesperson for B of A, pointed out the issue can occur when consumers are not sufficiently diligent when switching banks:
"As always, we remind customers to allow time for outstanding items to clear the account, and make changes to automatic payments and credits before closing the account."
About 20 percent of American customers decided they wanted to switch banks during the last year, but 63 percent of them said they were too concerned about switching electronic payments to do anything about this, according to Consumer Reports. This was what occurred after B of A publicized its charges for having a debit card.
Just the tip of the iceberg
According to Consumers Union staff attorney Suzanne Martindale, the step is good, but there is more out there:
"While this is a welcomed change in policy, consumers at Bank of America and other banks continue to face a myriad of obstacles that can make switching to a new financial institution a time-consuming mess. That's why we need Congress and the Consumer Financial Protection Bureau to enact reforms that make it easier for consumers to move their money."
In order to make it easier for customers to switch banks, the Consumer Financial Protection Bureau is considering brand new policies for banks. This could consist of adoption of portable account numbers that can transfer between banks, prohibiting unfair penalties and reducing check hold times.
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