Bank entitled to close account over fraud concerns

Categories:

Fraud & scams, Bank accounts, Closing/Freezing accounts,

Summary:

In December 2025, James sold an identification card and received a $50 payment into his bank account. The buyer then complained to James’ bank and asked for a refund. The bank treated the payment as suspected fraud, froze James’ account and later closed it. James said the buyer simply changed his mind, and the transaction was not fraudulent. He said the item was a lawful, custom-made product and was not refundable. James also said the bank had no reasonable grounds to suspect fraud because it related to a single transaction. He said the freeze and closure caused him financial hardship, disrupted his benefit payments, and made it difficult to bank elsewhere. He asked the bank to release his funds and pay him $10,000 compensation.

Published:

May 2026

Our investigation

In examining the bank’s communications with James, we found the bank told him in mid-January 2026 that it suspected his account was being used to facilitate fraud, and it said it would close the account later that month. James promptly provided information, including screenshots of his emails with the buyer, that he said showed the transaction and the money put into his account were legitimate.

The bank explained to James it was closing his account because it had reasonable grounds to believe he might have engaged in unlawful conduct, namely that his account may have been used to facilitate fraud, scams, money laundering or other criminal activity, and it said it could not obtain or verify the information it needed to meet its legal obligations.

We found the bank acted fairly and reasonably in deciding to close his account and in explaining its reasons. We also found the bank allowed James reasonable time before it closed the account in late February 2026.