Should I sue Bank of America for mishandling my account and improperly sending me to collections?
February 13, 2011 11:50 AM   Subscribe

Should I sue Bank of America for mishandling my account and improperly sending me to collections?

Sorry in advance - this is a long tale of how Bank of America has mismanaged my accounts. In short - I'm trying to decide if I should sue, and if so, how I should proceed.

Here are the sordid details...

----- Background ------

Nearly 10 years ago, I opened a business checking account for my business. The balance typically varied between $10,000-$30,000.

Several years ago, I noticed a large number of charges that I didn't make; someone had gotten access to my account, and was making large unauthorized purchases.

The charges were clearly fraudulent; I live in Massachusetts, but the charges were 8 separate purchases during a single day at a Home Depot in New York. Each charge was between $500 and $700.

I immediately reported this to Bank of America. To their credit, they immediately acknowledged that they were fraudulent, and promised to restore the missing money. Further, they warned me that I might see more charges over the next day; I should report those as well, and BoA would compensate me.

So, over the next several days, I watched as another $2,000 disappeared from my account. I reported those as well.

However, the charges CONTINUED for another several days. When I brought THOSE charges to BoA's attention, they ultimately realized that they have mistakenly NOT FROZEN the account when I first reported the fraud.

Ultimately, BoA restored ALL the money, but I was concerned about how insecure the whole account seemed to be.

I considered leaving BoA, but the branch manager seemed interested in keeping my business, so she offered a solution...

"Create TWO accounts; keep the bulk of your money in the first account. Use the second as an 'operating account', and keep just a few hundred dollars in it. Only the second account would have an ATM card (which was how the thieves were able to access your original account.)"

This seemed like a smart solution; however, what the manager never explained was that this "solution" would allow BoA to charge double the fees.

Further, I later learned that both account were inappropriate, because they both carried unusually high fees given how I would use them. Specifically, I would be charged a monthly "account analysis fee" UNLESS I made purchases with my ATM card. I would be charged this fee every month on the first account EVEN THOUGH THE ACCOUNT WAS INTENTIONALLY SET UP WITHOUT AN ATM card.

On the second account, I was charged fees because my balance was low, EVEN THOUGH I WAS INTENTIONALLY PLANNING TO KEEP THE BALANCE TO AN ABSOLUTE MINIMUM.

Neither of these things were explained to me.

Of course - I bear responsibility here too - I should have been more aware of the fee structure.

----- Present Situation ------

Fast forward a few years until this past September. I finally get fed up with how absurdly high the fees are on these accounts. So, I decide to close both accounts, and take my business to another bank.

So, I visit my local branch office and tell them I'm closing the accounts. The rep there apologizes for my dissatisfaction, and hands me cash for the balances of both accounts (just a few hundred dollars at that point). I assume that's the end of the story.

A month later, I receive statements in the mail for both accounts. "Account Analysis Fees" of about $24 had been applied to both. Since I'd withdrawn all the money when I closed the account, both accounts showed negative balances of $24.

The next day, I went back to the branch office to complain. The rep (who happened to be the same rep who'd closed the account), remembered me, and remembered closing the account. So, she clearly acknowledged the error, and apologized profusely. Ultimately, she said that it would be corrected, and that I should ignore the statements and fees. I left the branch, satisfied that the matter was resolved.

One month later, I receive ANOTHER statement for both accounts. $20 MORE dollars in fees have been applied; both accounts show a negative balance of about $44.

I'm furious. This time, instead of visiting the branch office, I call the customer service number on the statement. After speaking with the call rep and explaining the problem AGAIN, I'm assured that this is a BoA mistake, and it would be resolved. Again, I should ignore the statements and fees.

The next month (December), I receive ANOTHER set of statments, showing more fees, and a negative balance of $64.

Of course, it's now the holidays, so I don't have time to spend another hour on the phone, or take time from work to visit the branch office, so I decide to postpone resolving it until January.

Then, in January I get a fourth set of statements, with more fees, and both accounts showing a negative balance of around $84.

Irate, I call customer service again, and after numerous transfers, make my way to a "collections department." I explain the history of this debacle; the rep is sympathetic and apologetic. She assures me that the fees will be waived, and the account closed.

I tell her that my major concern is that BoA will report me to collections, and that my credit will be impaired, all because of mistake that Bank of America has made.

She assured me in no uncertain terms... "The total debt owed is too low. BoA does not report debts of this size to collections. You do not need to worry about this."

Of course, this time, I don't trust her, so I ask her to write and sign a letter to this effect: the negative balance is a mistake, not a debt; any "fees" will be waived; that under any circumstances, I will not be reported to a collections agency or credit agency.

A few days later, I receive the letter I requested. I consider the matter FINALLY resolved.

Then, two days ago, I receive a letter in the mail from two separate collections agencies, both claiming I owe BoA $160 (the sum of both accounts).

Absolutely furious, I call BoA again. This time, I call the BoA collections department directly. I immediately ask to speak to a manager. I explain the back-story to him, and tell him that I'd spoken with one of his reps just weeks ago, and that she'd made ASSURANCES that I would not be reported to collections. I told him about the letter SHE'D WRITTEN that stated this in BLACK AND WHITE. Yet, I hold in my hand two letters from collections agencies.

Again, he apologies, and said that the rep had made a mistake, and not pulled my account from the systems that sent the debt to collections. (He ignored that fact that she'd lied about BoA's policies on reporting debts to collections agencies).

However, he promised me that the debt HAD BEEN WAIVED, and that the claim would be rescinded from the debt collector. I asked him to put that in writing too. I've yet to receive that letter.

----- Bottom Line ------

I've spent hours on the phone with Bank of America.

But my real concern is that BoA will (or already has) reported this debt to a credit agency, at which point, things will spiral out of control (E.g., my other creditors - like American Express - will reduce my credit limit, which would really be a problem for my business. Or, my interest rates will increase, causing untold future costs.)

Clearly, their organization is dysfunctional. As you can tell, they've made a series of mistakes, and they're unable to resolve them. But I'm the one who's going to suffer.

Now, I can't figure out who to call, or how to get this resolved.

So - I'm not the litigious type - but I'm considering calling a lawyer. I don't know how else to protect myself.

I'm not expecting "legal advice" here. I'm just hoping that the hive can give me a general sense - is there a better way to protect myself? Should I sue? If so, how should I go about finding a lawyer? What type of lawyer?

What would you do if you were in my situation?
posted by stuehler to Law & Government (14 answers total) 2 users marked this as a favorite
 
I can commiserate. It took me three times and probably close to 10 hours to close my accounts with Bank of America. And those were very small personal accounts.

I don't think suing will accomplish what you want and will cost you a lot more money.

But I do think a strongly worded letter from a lawyer, especially since this has gone to collections, would do the trick. Also, the burden is on the debt collector to PROVE you owe a debt. You have strong evidence to the contrary, so pay attention to your mail and notify your lawyer if you see anything regarding a court date. You'll want to be there with that letter if the collections agencies go that far.
posted by zizzle at 11:59 AM on February 13, 2011


Response by poster: Zizzle,

Thanks for your commiseration, and sorry about your similar ordeal.

As I mentioned - my chief concern - and the ONLY reason I'd consider suing - is my credit report.

I've heard countless stories in the news lately about people who's credit has been ruined because of banking errors, and a bad credit report is like bad gossip. Once it's out there, it's impossible to stop it, or correct all the harm it can cause.

I'm also thinking about suing because I can't even figure out who, at Bank of America, to talk to about this. My branch office can't resolve it. Customer service can't. The debt collection office seemingly can't.

That company has grown so big, it can't function, as far as I can tell.
posted by stuehler at 12:06 PM on February 13, 2011


Best answer: In reading this tale of woe, I'm sympathetic, but as a former small business owner I think the lesson learned is you have to be smarter and/or more aggressive in correcting mistakes than your vendors.

Okay, BoA is a gang of idiots. Full stop. That agreed with, I think you:

- should have realized you'd pay roughly double for two accounts, especially with a fee-hungry bank like BoA. And having two accounts in case one got defrauded is like owning two houses in case one gets robbed. It has a certain logic in security but it's not extremely efficient. Okay, you said you realized this.

- were slow in wising up and taking your business away from BoA. It's harder these days to find a really local bank, but anything's better than one of these big national ones. You finally learned your lesson there.

- should have made it a daily priority to get the matters resolved and the accounts cleared and zeroed, long about the 2nd time they dinged you AGAIN, and not rested until you got statements in writing that it was all over and done. I mean, you gave up on the matter and quit hounding them because it was the holidays? Really?

- should have NEVER trusted a verbal statement like "BoA won't go after an amount this small." Well, crap. At this point, you're negotiating with terrorists.

You did well to have gotten the letter you said you did. Hang onto it for dear life. Hound the last person you talked to DAILY until you get the next one, and until you get a statement showing the account zero and closed.

Contact the collection agencies NOW and find out how and where to fax or file-attach a copy of the letter you have, and/or the one that's coming. Collection agencies aren't the great customer service interface in the world, but the legit ones do know how to close a file if the supposed debtor has proof the debt is not currently an issue.

Get a copy of your credit report from the big 3 at www.annualcreditreport.com
(note, this is NOT the bullshit site that advertises on national TV). If you DON'T see signs of this debacle on your credit report, just keep checking annually or until some sign that it has gotten on there. If you get turned down or any existing credit lines reduced, you will again become entitled to a free credit report from the big 3 (read the letter you'll get at that juncture)

If this crap IS on there, then initiate a dispute on that item, using the letter(s) from BoA to do so. It should not be difficult to get this cleared off.

You are a long way from having anything worth taking BoA to court for. Companies like theirs have idiots working for them. In other news, water is wet.
posted by randomkeystrike at 12:13 PM on February 13, 2011 [5 favorites]


Not a lawyer, but I've had to deal with banks before. I suggest that you do two things:

1) Pull a copy of your credit report now, and a few times over the course of the next year or so to make sure they haven't put anything negative on there. You have the right to receive free annual credit reports each year from each of the big three agencies, so you can pull one every four months (rotating among them) without paying a dime. Check out the Federal Trade Commission site here. You have the right to dispute any information on the report and the agency must investigate disputed items, and remove them if warranted. Sounds like you have plenty of evidence in your favor.

2) Contact your relevant state banking authorities. Here is a list of state banking authorities by state. They are usually well-experienced at resolving consumer banking complaints, and BoA WILL pay attention if they come knocking.
posted by jdwhite at 12:19 PM on February 13, 2011 [1 favorite]


Read this pamphlet printed by the Federal Trade Commission (pdf file). It lists step by step instructions for checking your credit report and disputing items on it.
posted by hhc5 at 12:39 PM on February 13, 2011 [1 favorite]


Yeah, you'll get more mileage out of disputing the debts on the credit report. It doesn't cost you anything and it gets you the resolution you want.
posted by lockestockbarrel at 12:53 PM on February 13, 2011


Do you know what lawyers charge? $200-$300 per hour. How much do they want now? $160? So logically, you come out ahead by hiring a lawyer IF and only if they can resolve this situation in, what?, 40 minutes or less? Otherwise, find another approach. Sorry for this ridiculous situation.
posted by slidell at 12:57 PM on February 13, 2011


Do you know what lawyers charge? $200-$300 per hour. How much do they want now? $160? So logically, you come out ahead by hiring a lawyer IF and only if they can resolve this situation in, what?, 40 minutes or less?

Unless you want you and your friends and your family to live in a world where large organizations don't get away with this kind of thing.
posted by amtho at 2:11 PM on February 13, 2011 [2 favorites]


Response by poster: Do you know what lawyers charge? $200-$300 per hour. How much do they want now? $160?

Slidell - the issue isn't $160. All things considered, if I could pay them $160 and be guaranteed that this matter was resolved - I would. (Even though I shouldn't owe them anything).

The problem is that I have no confidence in that outcome. What would probably happen - I'd pay $160, and next month, I'd get another bill for fees on both accounts. Apparently, BoA is incapable of closing an account.

I'm contemplating suing them because I don't know what else to do. I've spoken with the manager at my branch office, numerous reps and manager in customer service, and several reps and a manager in their collections department.

All of them - consistently - have been unable to resolve the matter, which gets worse (for me) with each passing month.

I was wondering if the threat of a lawsuit would escalate the issue to someone who could resolve it professionally. Or, at least compensate me for the damages that might result if they report a false debt to a credit agency.

BoA is the largest bank in the country. So, I'm not sure what chances I have of disputing such a charge with the credit agencies, regardless of the evidence and paper trail that I'm trying to collect.
posted by stuehler at 5:29 PM on February 13, 2011


Your STAYING IN THEIR GRILL will escalate the issue to someone who can resolve it professionally.

I HAD a lawyer to help me deal with a number of medical debts resulting from an insurance subrogation hassle resulting from an accident. He wrote a few of the letters where some real negotiation was involved, but correcting stuff in error that is as clear-cut as this, he told me to do it myself. I did. It worked. Trust me, BoA is not more incompetent than your average hospital. And they get threatened with lawsuits every day. You're not going to frighten them, or cause them any economic harm. But if you ping enough people, eventually you'll get someone who will actually do their job. You say every time you talk to them, they agree that it needs to get fixed. Okay then. Another tip - if there's a branch within any kind of driving distance at all, put your shoes on and go see a branch VP. The people in head-set land are not exactly at the top of the food chain.

(some) lawyers love it when a client says "it's not the money, it's the principle of the thing." That's carte blanche to bleed you dry.

Unless you want you and your friends and your family to live in a world where large organizations don't get away with this kind of thing.

amtho, I don't want to live in a world like this, which is why I bank with mega-banks as little as possible. I have a home mortgage with BoA because it got re-sold. And yeah, they've screwed up the escrow account and it took 5 calls to resolve it. Next house I buy, getting a mortgage with another company will be a priority. But you will not hurt a BoA with a lawyer on one little thing like this. A class-action? Sure, great. But not something like this.
posted by randomkeystrike at 7:09 PM on February 13, 2011


PS - if it's not coming across, I'm on your side. :-)
posted by randomkeystrike at 7:45 PM on February 13, 2011


Thanks, randomkeystrike. I was mainly responding to the understandable impulse many people have to solving these kinds of issues by computing which involves the least cash outlay. It's completely understandable, but misses a lot. I think you get it.
posted by amtho at 7:55 PM on February 13, 2011


Response by poster: Randomkeystrike - no worries. Your answer is exactly what I was looking for.

As I mentioned - I'm not looking for concrete legal advice. I was hoping for a little perspective, since I'm so irate (and a little irrational) about this.

And a solid, reasonable, pragmatic perspective is exactly what you provided.

Like many small business owners, I'm a little overworked. So, I didn't pay much attention to my bank accounts, assuming they would "manage themselves." As you point out, that's a big mistake, and I bear responsibility for that.

I also was lax in responding to BoA's mistake; that's my fault too. As many people mentioned, when they made a mistake, correcting it should have become a top priority.

Last - the consensus is clear... I probably shouldn't think about suing. It will be costly and ineffective. Instead, focus on correcting any issues with my credit report.

Many thanks to all who've responded.
posted by stuehler at 4:45 AM on February 14, 2011


Unless you want you and your friends and your family to live in a world where large organizations don't get away with this kind of thing.

As someone who is currently in a lawsuit and being crushed by legal bills, paying unnecessary legal fees is anathema to me. Legal fees add up surprisingly quickly. To be honest, the idea that the OP had the spare capital to do this for the love of justice just did not occur to me. The perspective I bring, not to diminish anyone else's, is that legal fees can be absolutely crushing and that when you are being financially crushed, ideas like proving a point to an enormous institution seem exotic at best.

If you think calling BofA is a waste of time, try a lawsuit. Try just finding a good lawyer. My current attorney is great but it took several tries to find him. The earlier attorneys added rather than removed stress. Two billed me in weird ways (e.g., over the hourly cap that we had agreed upon in writing). It'd be a whole new layer of hassle, stress, and possible billing errors.

I completely understand your worry and frustration (I have a similar story). But I agree with randomkeystrike that this is the kind of runaround that you can do yourself for free. Almost every day on my way to work, starting at 8:01, I call financial institutions and deal with crap like this. Make it your new hobby. Every time you feel bitter about the hold time just think to yourself "at least I'm not paying an attorney $250/hour to sit here on hold."

tl;dr I'm glad to see you no longer plan on suing. Good luck.
posted by slidell at 8:33 PM on February 15, 2011


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