Hi, I’m Alex Darr, and I’m a lawyer. I handle a wide variety of cases, mostly in the consumer-protection arena. One of the most common claims I help my clients with is for violations of the Equal Credit Opportunity Act. That federal law provides that a consumer of credit is entitled to specific reasons if s/he receives adverse action. In layman terms, if a creditor closes an existing credit account (credit card or line of credit) or denies you opening a new account, they have to tell you why they did it. Failure to do so is, generally, against the law, and an affected person can file a lawsuit to protect and vindicate his rights.
Below are some examples where banks have failed to provide a specific reason (in my opinion), and where I think an affected person has a claim under the Equal Credit Opportunity Act. If I list something here, it means that I think the conduct is actionable (and maybe have litigated the specific issue before and gotten a recovery). Inclusion in this list is not a guarantee of recovery if you’re affected and decide to file a lawsuit (whether by yourself, with another lawyer, or with Darr Law LLC).
Lastly, by making this list, I’m not trying to solicit business--I’m trying to show consumers examples of activity I’ve witnessed that I think is actionable. If you think you have a claim, you might want a lawyer to bring your claim. And if you want a lawyer you should, of course, feel free to contact me at Darr@Darr.Law. Darr Law would be happy to evaluate your claim and discuss a potential representation.
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Throughout 2015 and 2016, Citi sent out letters indicating that accounts were closed, but not giving a reason. This is a violation of the ECOA.
Here’s a sample letter.
More recently, Citi has changed its efforts to comply with the ECOA. Citi will send a letter saying accounts are closed and indicating that you can ask for the reason you were closed. You have to ask within 60 days. If you ask for the reason, Citi has a legal obligation to provide the requested specific reason for the closure. If they fail to do so, there may be a claim.
BMO Diner’s Club
BMO Harris Bank issued a Diner’s Club card in late 2014. It was a short-lived product. When BMO Harris Bank closed the card accounts, they sent a letter that didn’t provide a reason for closure--they made a passing mention of federal law and moved on.
If you had a Diner’s Card, you probably received the exact same letter. If you had a Diner’s card, I think you have a claim worth bringing.
Usually Amex is pretty good with its closure letters, providing a specific reason to support an account closure or application denial. But on occasion, the reason provided can be vague. For example, recent closure letters will simply state “not used for intended reason.” I’d argue that’s too vague and not specific enough to comply with the ECOA. A person who receives that letter has a good potential claim.
Additionally, I’ve seen a few instances where American Express’s closure letters don’t include specific language required by the ECOA about non-discrimination. This also gives rise to a potential claim.
Here’s a sample letter with both of these issues. Sample letter
US Bank / Fidelity / Elan
Recently, there have been increased reports of closures from US Bank and Elan Financial (one of their more popular products is the Fidelity Credit Card, which pays 2% cashback).
The Bank(s) are closing credit card accounts. When they close the account(s), they send a letter that simply says that the account will be closed (or is closed immediately). There is no explanation included.
A number of individuals were closed by Discover for sharing Authorized User spots on their cards. When they were closed, the affected persons received closure letters like the below sample. The reason is not sufficiently specific, in my opinion. If you were closed for piggybacking with Discover, you probably got a letter like this one.
Additionally, I’ve seen some Discover closure letters that provide no reason for closure at all. An individual who receives a letter like that almost certainly has an ECOA claim.
Barclays often closes accounts with the proffered reason of “Your History of Account Usage.” I have a number of pending arbitrations based on this specific closure letter.
Chase is using an interesting tactic in an effort to comply with the Equal Credit Opportunity Act. The steps are as follow:
a. A user is using their cards in a manner that Chase doesn’t like. The client is using his/her deposit accounts (checking and savings) very minimally, if at all.
b. Chase sends a closure notice saying that the deposit accounts will be closed in 30 days or so. But then Chase will also send a separate closure notice saying the CCs are being closed immediately because the affiliate has ceased business with you (the affiliate being the banking operation managing the deposit accounts).
c. Deposit accounts eventually closed.
The issue I see is that the deposit accounts were closed due to CC activity. Chase needs to identify what about the CC activity was objectionable to justify the closure of the credit cards, because Chase relied on that in its decision to close the deposit accounts (and by extension the credit cards).
Additionally, there are times when Chase denies applications or closes accounts with vague reasons.