CFPB limits creative control with closed accounts

I don’t know about you, but I’ve reopened many things in my life. My favorite thing to reopen is the plate of leftovers that my sister hid in the refrigerator the night before. Sure, she gets upset, but not my problem, right? She should have hidden it better.

So, you can imagine my surprise when I found out that reopening accounts without customer permission…is a bad thing? Or in the words of the CFPB: “an unfair act or practice.” Wow!

According to this Circular:

“The CFPB found that a financial institution engaged in an unfair practice by reopening deposit accounts consumers had previously closed without seeking prior authorization or providing timely notice. This practice of reopening closed deposit accounts caused some account balances to become negative and potentially subjected consumers to various fees, including overdraft and NSF fees. In addition, when the financial institution reopened an account to process a deposit, creditors had the opportunity to initiate debits to the account and draw down the funds, possibly resulting in a negative balance and the accumulation of fees. These practices resulted in hundreds of thousands of dollars in fees charged to consumers. The CFPB concluded that the institution’s practice of reopening. consumer accounts without obtaining consumers’ prior authorization and providing timely notice caused substantial injury to consumers that was not reasonably avoidable or outweighed by any countervailing benefit to consumers or to competition.”

 

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