Bank of America says it will put a figurative bullet in the head of its so-called “zombie accounts,” to keep them dead for good. It will no longer accept electronic credits or debits to accounts that have already been closed, generating fees and other problems for unaware consumers.
Zombie accounts stay dead at BofA
Bank of America announced last week that it will no longer be reviving accounts that have been previously closed and, by some error or oversight, continue to receive electronic transactions.
The term “zombie account” was coined in a May report in Consumers Union. The post, Trapped at the bank, denounced the practice, saying it is one of the issues that make switching banks difficult for some consumers.
When a bank reopens a dead account without telling the account holder, it can leads to unexpected penalties and maintenance fees, sometimes amounting to hundreds of dollars. According to Consumers Union, the publisher of Consumer Reports, Bank of America and Chase are the only two large banks practicing the “resurrection” of old accounts. And now BofA is off the grid.
The changing of banks
Betty Riess, a spokesperson for Bank of America, pointed out the problem 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.”
Last year, when Bank of America announced it would be charging fees for debit transactions, many American consumers had had enough, prompting them to switch banks. According to a recent release from Consumer Reports, 20 percent of American consumers thought about switch banks in the last year. However, 63 percent of them say they were daunted by issues such as how to deal with the transfer of electronic payments.
A good start, says Consumers Union
Suzanne Martindale, staff attorney for Consumers Union, applauded the move by Bank of America, but said it is the tip of the iceberg:
“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.”
Consumers Union has pressured Congress and the Consumer Financial Protection Bureau to consider certain policy changes to make switching banks an easier matter for consumers. Among those are the adoption of portable account numbers that can transfer between financial institutions, reducing check hold times, and prohibiting unfair penalty fees.