Bank Account Closure Lawsuit Investigation

Attorneys working with ClassAction.org are looking into whether a class action lawsuit can be filed on behalf of individuals whose bank accounts were closed based on inaccurate or improperly disclosed consumer reports.

Specifically, they believe some banks may have closed customers’ accounts after reports from data analytics companies LexisNexis and Regulatory DataCorp—which claim to screen consumers on behalf of financial institutions to identify potential risks—falsely linked them to suspicious activity, fraud or money laundering.

The attorneys suspect that these companies’ reporting practices may violate the federal Fair Credit Reporting Act (FCRA), which requires that consumer reporting agencies follow reasonable procedures to ensure the maximum possible accuracy of the information in their reports. It’s also possible that LexisNexis and Regulatory DataCorp have run afoul of the FCRA’s disclosure requirements, which are meant to give consumers a chance to review the information reported about them and dispute inaccurate or misleading information.

Bank Account Closures: Suspicious Activity, Fraud, Money Laundering

Why would a bank close your account? More and more people seem to be asking this question as banks have reportedly been dropping an increasing number of customers, often without explanation.

In April 2023, The New York Times reported on the trend, noting that banks “are taking an even harder look” at customer transactions and are quicker to close accounts that they believe could potentially be linked to fraud, money laundering and other illegal activity. However, The Times found that in most cases where a suspicious activity report was filed, “the customers are probably innocent.”

According to posts on online forums like Reddit, though some customers are being told that their account was closed for “suspicious activity,” many are given no explanation at all for their bank account closures—and no way to prove that they were not engaged in fraud, money laundering or other illegal activities.

One Reddit user suggested that the issue could be caused by “a mismatch” with the bank’s verification process—and several lawsuits have been filed alleging that the consumer reports used by some banks to identify potential risks could contain records that belong to other people.

Lawsuits Claim Inaccurate Reports Are Behind Account Closures, Raised Rates

Two consumers whose credit card accounts were “mysteriously closed” filed a lawsuit in March 2024 against Regulatory DataCorp (RDC), a data broker that collects information from public records to sell to banks and other clients. The plaintiffs claimed the company violated the Fair Credit Reporting Act (FCRA) by failing to ensure that its reports were as accurate as possible. According to the lawsuit, RDC relied on “wholly inadequate matching procedures,” many times linking records to consumers’ reports “using only a name.” As a result, the company frequently made “inaccurate associations between innocent people and criminals” or others who are ineligible for credit in the U.S., the suit said, which led to consumers’ bank accounts being closed.

The lawsuit went on to claim that RDC imposes restrictions limiting banks from disclosing to customers where the reports came from or even that a report was obtained about them at all. Per the case, this is a direct violation of the FCRA, which states that consumer reporting agencies may not prohibit users of their reports (e.g., banks) from disclosing the contents of the reports to consumers if an adverse action was taken based on the information.

Similarly, a lawsuit filed in February 2021 claimed LexisNexis violated the FCRA by failing to ensure the accuracy of the driving information it reported about consumers to insurance companies. Specifically, the lawsuit claimed the company’s automated procedures for gathering information failed to correctly identify consumers and frequently matched driving records with the wrong people—resulting in adverse actions by insurers.

The lawsuit further claimed that LexisNexis’ illegal reporting practices resulted in a “cascading effect” whereby other auto insurers would rely on “the original mistake” when issuing policies or setting rates, leaving customers with no way to correct the inaccurate information.

How Could a Lawsuit Help?

A class action lawsuit, if filed and successful, could provide money for consumers whose bank accounts were closed based on inaccurate or improperly disclosed reports. It could also force the consumer reporting agencies to change their reporting practices.

For instance, a class action lawsuit against TransUnion Rental Screening Solutions (TURSS), a company that provides consumer reports to landlords about prospective tenants, resulted in an $11.5 million settlement that provided estimated payments of $40 to $800 to covered individuals. The company also agreed as part of the settlement to make certain changes to its business practices, including to only link consumers to criminal records after matching both their name and their date of birth, Social Security number or address.

Account Closed by Bank? Here’s What You Can Do

After you get in touch, an attorney or legal representative may contact you directly to ask you some questions about your experience and explain how you may be able to help the investigation. It doesn’t cost anything to fill out the form or speak with someone, and you’re not obligated to take legal action if you don’t want to.

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