We've been customers of the same bank for over twenty years, never once overdrawn. My son overdrew his account due to an honest mistake and incurred over $1100 in fees. The bank forgave some, and he paid the remaining negative balance immediately. We then took them to small claims court for the rest of the assessed fees. The bank settled and returned the fees except one. We felt this was reasonable. After we received the check, they closed my son's account without warning; is this legal? They will not honor any debits and are holding his balance for two weeks. This was clearly retribution, will they put a negative report to his credit?
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The bank had the right to close the account, whether or not it did so for spite. Banks can close deposit accounts (with appropriate notice) for no reason at all.
As for a negative report to ChexSystems or another credit reporting agency, the bank can file a report as long as it is accurate. In this case, the bank could file a report that the account was closed and that there was overdraft activity, but it could not state that the bank had to charge off fees (at least not the fees that the court ordered the bank to return).
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The bank had the right to close the account, whether or not it did so for spite. Banks can close 