So because my bank is closing, I opened an account with Chase on Saturday (4/17). Today, I tried to check the status of my transfers and was informed that Chase locked my accounts for security concerns, and to call them to straighten things out. I was informed over the phone that the bank was going to close the accounts, I would never be able to bank with Chase again, and she had no information as to why. I have never had a bounced check, overdrawn account, or an unpaid fee with any bank. I wanted to know: Show
A. Are they allowed to close my account without notice? B. what can I do? C. Do they have to tell me why? Uniswap founder Hayden Adams announced that his banker, JPMorgan Chase, closed his accounts without giving notice or a reason for the closure. He made this known in a tweet and added that he wasn’t the only one suffering the same fate. JPMorgan Closes Adams AccountAccording to him, many companies and individuals with affiliations to the crypto industry have suffered the same.
The move comes months after a report revealed that the US Securities and Exchange Commission (SEC) had opened investigations on Uniswap Labs. Uniswap Labs is the major developer behind the Uniswap protocol, the largest decentralized exchange in the world. The investigation became public in November when Wall Street Journal reported that SEC officials were looking at how investors use the DEX. Uniswap Labs spokesperson at the time reiterated the company’s commitment to working with regulators and complying with relevant laws. Why the Bank Probably Closed his AccountThere have been several hypotheses as to what could have led to this move by the banks. According to the former chairman of US Commodity Futures Trading Commission (CFTC), Brian Quintenz, this might be a “shadow de-banking of crypto” by the authorities.
The ex-government official who’s now an advisory partner at Andreessen Horowitz tweeted that the directive could be from bank examiners such as the Federal Reserve or The Office of Comptroller of the Currency. These agencies can direct a bank to close an account because the customer is too risky. In such cases, the bank can’t disclose its reason for closing the account. JPMorgan’s History of Account ClosureAs Adams stated, this isn’t the first time the bank will do something like this. For example, the bank closed the payroll account of crypto exchange Kraken with only a five days’ notice. In 2018, it also shut down Erik Voorhees’s account. Erik Voorhees is the founder of the crypto exchange ShapeShift. The bank also shut down accounts belonging to Bitcoin mining firm Compass Mining in 2019. These moves from the bank make it difficult to understand its stance towards crypto. While it’s closing down crypto affiliated accounts, it has also been taking on a crypto exchange such as Coinbase and Gemini as customers. Beyond that, the bank also offers its wealthy clients access to crypto investment funds. Reports continue to trickle in from people who report that Chase closed down all of their accounts. This often happens soon after opening a new Chase card. Sometimes it happens after making a single very large purchase. Sometimes it seems to be triggered by an abrupt increase in spend overall. When people ask Chase why they were shut down, Chase often refers to the large number of accounts they opened (not just with Chase) in the past year. Fortunately, Chase will sometimes review the decision and overturn it. Why Chase shutdowns happenThis Reddit post offers a logical explanation for why Chase is shutting down accounts. The theory is that Chase is actively trying to avoid Bust-out Fraud. Bust-out fraud is where a fraudster builds up their credit with responsible credit card use and then suddenly runs up all of their balances before disappearing. This Experian white paper describes the bust-out process as follows:
The problem for credit card rewards enthusiasts is that our behavior patterns often look exactly like these bust-out fraudsters, with the exception of the final fraudulent bust-out activity (which we don’t do!). The old (but still relevant) shutdown reasonsThe Experian white paper asserts that lenders typically look for suspicious activities to identify bust-out behavior:
Those who heavily manufacture spend often exhibit many of the above listed behaviors. They are known to make multiple payments within one billing period, and they certainly make purchases in unusual purchase amounts. Those who have been manufacturing spend heavily for a while are used to getting shut down for these activities. The new shutdown reasonsThe Experian white paper goes on to argue that predictive bust-out scores can be computed entirely from credit data:
I think it is safe to say that Chase has bought into this argument. Whether or not they specifically use Experian’s bust-out scoring is irrelevant. It’s clear from many datapoints that Chase is using credit reporting data and that shut-downs are often triggered by some of the behaviors Experian described above (credit line increases, new accounts, changes in utilization and balance growth). Summary of Shut-Down CausesYour accounts can be shut down due to suspicious spending activity (on your Chase cards), or suspicious patterns on your credit report which is collected across all of your accounts (not just Chase accounts). Anecdotally it seems that applying for a new Chase credit card is one of the ways to ensure that Chase will evaluate you overall for suspicious activity. Avoiding Chase shutdownsThe following advice is conjecture. I have no reasonable way to test this advice. 1. Keep your credit report cleanAn ideal credit report shows a long credit history with no bad marks, few new inquiries, few new accounts, and a low credit utilization:
2. Keep your Chase card activity cleanAs a reminder, Experian noted these suspicious activities: “frequent convenience checks; frequent cash advances; multiple payments within one billing period from different accounts and different sources; purchases from high-risk, high-value merchants; and unusual purchase amounts.” That leads us to these obvious recommendations:
3. Avoid signing up for new Chase cards if your credit report already looks suspiciousChase continues to have many of the best signup offers, so I would never say to avoid Chase cards altogether. However, if your credit report shows a large number of recent inquiries and new accounts, you may want to hold off. At least consider the risk when debating the pros and cons of getting a new Chase card. Bottom LineChase has been shutting down accounts due to suspicious card activity and credit activity. Reviews seem to be triggered, in part, by applying for new Chase cards. Having too many new accounts on your credit report is a clear risk factor. Unfortunately, we don’t know how many accounts is too many. Nor do we know why some accounts are reinstated after review and others are not. Hopefully following the recommendations given in this post will keep you safe. Why did Chase close my savings account?Chase Deactivates Your Savings Account If You Don't Use It For 60 Days. If you don't use your Chase online savings count for 60 days, it becomes deactivated. Which could be a big problem if you were counting on making a transfer to cover checks that you just wrote.
Can Chase close your account without notice?Yes. Generally, banks may close accounts, for any reason and without notice. Some reasons could include inactivity or low usage.
Why did Chase close my account without notice?Chase has been shutting down accounts due to suspicious card activity and credit activity. Reviews seem to be triggered, in part, by applying for new Chase cards. Having too many new accounts on your credit report is a clear risk factor.
Can Chase reopen a closed savings account?In a word, yes, a closed bank account can be reopened. It, however, largely depends on why the bank closed the account in the first place as well as the bank's policies. A bank can close an account for any number of reasons, including dormancy and potentially fraudulent activity.
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