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Zombie bank accounts rise from the dead and feed on your finances

Most banks make it too hard for you to close an account

Published: October 2012

Zombies are taking a big bite out of the popular culture these days. Those frightening, flesh-eating ghouls seem to be rising up everywhere you look.

On TV shows (“The Walking Dead”) and in movies (“Resident Evil”), books (“Pride and Prejudice and Zombies”), and video games (“The Last of Us”), the once-moribund zombie genre has definitely come back from the dead.

And with Halloween here, you should probably expect to see plenty of pint-sized zombies on your doorstep (feeding only on candy, we hope).

Nonetheless, for all of the buzz surrounding the undead this year, there has been one zombie trend that was profoundly unpopular, and it’s all too real.

It’s the zombie bank account.

No, seriously.

When you close a bank account, there’s a chance that the “dead” account could come “back to life” to haunt you.

Here’s how a zombie account typically works:

  1. You close your checking account with Bank A.
  2. When Bank A receives a direct-deposit check for you or a notice for automatic bill payment, instead of forwarding the transactions to your new account at Bank B, it reopens your old account and might not even notify you about this move.
  3. You get hit with charges on an account you thought was dead and buried. Those fees and penalties that can add up to hundreds of dollars.

For the past year, Consumers Union, the policy and advocacy arm of Consumer Reports, has worked to drive a stake into the heart of zombie accounts by calling out banks and pressing the government for reforms. Bank of America recently announced that it was dropping the controversial practice, citing customer feedback.

That was a good step. We haven't seen the practice pop up again since the announcement, but as any horror-movie buff will tell you, when it comes to zombies, there's always the fear that they could come back. And zombie accounts were just one part of a bigger problem facing bank customers. Many banks, including Bank of America, are still making it too hard for you to close your account and move to another institution.  

Our recent “Trapped at the Bank” report takes a hard look at zombie accounts and other hassles that keep you from switching banks. In a recent national survey, we found that almost one in five customers said they considered switching banks in the previous year. But the challenge of transferring automatic payments and other factors kept half of them from making the switch.

Zombie accounts are just one part of a bigger problem facing bank customers.

Right now, we are pressing Congress and the Consumer Financial Protection Bureau to consider a number of policy changes to enhance consumer choice and bank competition, including these reforms:

Banks should . . .

  • Be required to provide customers with clear and accessible account-closing procedures.
  • Be required to bear the responsibility for transferring a customer’s automatic payments and deposits from an old account to the new account within 14 days.
  • Provide same-day electronic fund transfers at no cost to customers.
  • Reduce check hold times so that consumers can quickly access deposits in new accounts.
  • Be prohibited from assessing unfair fees for account closures.
  • Be prohibited from reopening accounts after consumers close them.

Also, bank regulators should examine the feasibility of portable bank account numbers to facilitate easier bank switching.

If you’re frustrated with your bank, read our report on bank fees. And to learn more about the tricks and traps of banking, go to Consumers Union’s

This feature is part of a regular series by Consumers Union, the public-policy and advocacy division of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.

Read other installments of our Policy & Action feature.

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