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Home >> Accounts >> Business Accounts
Bank Closes Accounts; Causes Huge Problem
My daughter is hysterical after trying to deposit funds from her restaurant business for payroll checks payable tomorrow, and being told her funds would not be accepted. They said her accounts were all closed because of "suspicious activity". She has two businesses, a personal account, savings account, an account in her and my son's name, for which she acts as the custodian, and a savings account for her ten year old son.
Even if there turns out to be suspicious activity from which the bank is protecting her, in the meantime, she has many checks that have not come in which will not be covered and the bank is not letting her deposit the funds to cover them. She has had the accounts for over ten years and works her fingers to the bone from morning to night to keep afloat and care for her children in this horrible economy. How can they treat her this way? She was given no notice at all. If no fraudulent activity on her part is found, will the bank be responsible for overdraft fees and any other costs to her associated with this? Does she have any legal recourse?
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 With limited information, it is difficult to say what is happening. When an account is closed and a replacement is not opened, it leads one to believe that it was your daughter's account that was suspicious.
The bank is not required to keep an account open or bank anyone they don't want as a customer. They have the same rights as the customer, who can close an account. There are exceptions with regard to certain types of deposits such as those from the government, i.e., Social Security.
There may be a notice requirement from the bank or a waiting period required, before closure. This should be defined in the deposit agreement between your daughter and her bank. There are usually exceptions to this, allowing a faster closure, depending on the circumstances. The bank is not obligated to discuss if they feel those exceptions exist.
Because it is allowed for in the agreement, the bank is not liable for charges. If your daughter feels that she was harmed because of this, she may have to go to court.
Published on BankingQuestions.com 3/30/09
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