Is it discrimination to cancel a customer’s checking account for their bad credit? ING Direct has done so to Nick, who emailed me (and Consumerist) a complaint forwarded to the ING Direct ombudsman. ING Direct has closed his Electric Orange account, a checking account that earns 0.20% – 1.10% APY currently.
Evidently, ING Direct performs periodic account reviews and will close accounts from customers who may abuse their overdraft protection based on credit reports. Nick admitted he had been “living in” the $1,000 overdraft protection (more like a cash advance). That could have triggered the account review.
Banking Deal: Earn 1.75% APY on an FDIC-insured money market account at CIT Bank.
I must express that I am heartbroken!! Yes, I have credit that is less than desirable, but I do not feel that is a basis for your discriminatory actions. Your decision has left me heartbroken, and also feeling foolish for all the recommendations that I’ve made to people for ING Direct…
Also of note, I have received two letters from your company regarding making more than “six transfers” from my savings. After the first letter, I carefully planned my transactions in such a way that I would use 2-3 transactions on each of my savings accounts, after which point they would be used for deposit only. ING Direct does not to tell people that they count transfers among ALL the savings accounts for a customer number toward the six each month.
As someone who received a similar six-transfer-maximum letter, I am sure Nick is misinformed on this point. The limit is six per account, not per SSN, as confimed by an ING Direct customer service representative. Nick probably received a second letter after changing the withdrawals because these letters are delayed by at least a month.
But this issue is unrelated to the closing of the checking account. Was this done fairly? Continue reading for ING Direct’s initial notice and Nick’s full response.
This letter was sent from ING Direct to Nick.
Customer Number: XXXXXXXXXX
Based on your credit score, which was provided by a consumer-reporting agency, we have decided to close your account. We have reduced your Overdraft Line of Credit to zero ($0). We feel this action is in your best interest as well as ours.
Because we want to make sure you have time to manage the transition of your account, we will leave the deposit portion of your account open for the next 30 days. Please use that time to:
* Change any direct deposits you currently have scheduled for your Electric Orange.
* Update any bill payments that are currently set up for your Electric Orange.
* Repay any outstanding balance you might have on the Overdraft Line of Credit.
* Allow any pending transactions to clear.
After 30 days, you will not be able to use your Electric Orange – it will be restricted from all account activity. This means you will not be able to transfer funds in to or out of your Electric Orange or use your MasterCard(r) debit card.
Any account balance plus any interest earned on your Electric Orange will be transferred back to your external, linked checking account five business days later. However, if we know of transactions that have not cleared within those five days, we will wait to transfer funds until those transactions have been processed.
Please keep in mind, that while information from a consumer-reporting agency in whole or in part influenced our decision, the reporting agency did not make this decision and cannot provide information about it. However, if you have any specific questions regarding your credit report, you can contact that agency directly using the following information:
Atlanta, GA 30374-0241
Under section 612 of the Fair Credit Reporting Act, you have a right to obtain a free copy of your credit information on file at the agency, if your request is made within 60 days of receiving this notice. Under Section 611 of the Act, you also have the right to dispute the accuracy or completeness of any information contained in that report.
Please note this does not affect any other accounts you may have with ING DIRECT. In addition, you are welcome to re-apply for another Electric Orange again in 30 days. If you have any questions, you can give us a call at 1-888-464-0727 from 8 AM to 8 PM any day of the week.
Here is Nick’s full response. Is it warranted?
When I first opened my ING Account, the rates, services and products were unlike anything I’d encountered in the banking world! The ING Direct website is fantastic, easy-to-use and VERY helpful. If one calls your call center, the representatives are always helpful, enthusiastic, and definitely one of the better customer service experiences out there. You deserve a great kudos
However, I have enclosed an email that I received yesterday, and I must express that I am heartbroken!! Yes, I have credit that is less than desirable, but I do not feel that is a basis for your discriminatory actions. Your decision has left me heartbroken, and also feeling foolish for all the reccomendations that I’ve made to people for ING Direct. You can bet that has ceased, and will be replaced with a stern warning for anyone considering opening any kind of account with your company. I have also re-advised people to whom I have reccommended ING Direct to in the past, as I wish no one to have to go through this terrible situation. I’ve also advised several finance ‘blogs as to ING Direct’s new practices, as they have spoken very highly of your company in the past.
Also of note, I have recieved two letters from your company regarding making more than “six transfers” from my savings. After the first letter, I carefully planned my transactions in such a way that I would use 2-3 transactions on each of my savings accounts, after which point they would be used for depost only. ING Direct does not to tell people that they count transfers among ALL the savings accounts for a customer number toward the six each month. This practice is misleading, and should be clarified in future letters sent out.
I have closed out my CD’s, and all but two accounts. I will eventually be closing all of my accounts, and using only my local Credit Union.
Thank you for your time, and I wish you the best of luck in the future.
I still hold a good portion of my cash at ING Direct, though in a few months I plan on simplifying my finances and reducing the number of banks I do business with.
Updated September 24, 2015 and originally published May 10, 2007.