I am an Australian citizen.

Many years ago, whilst travelling on holiday to the US I signed up for a Bank of America e-banking account. It had no monthly fees and all was well. Every time I went on holiday I would deposit money into the US account and use it freely to pay merchants/businesses in the US.

Recently the bank abruptly removed its e-banking account and apparently migrated its e-banking customers to a core checking account with a $12 monthly fees if the account is less than $1500 US.

Are banks legally allowed to do this? In particular, no notice was provided on the upcoming monthly maintenance fee. I had not been sent any information via email or mail about the new account fees. It was only when I logged into the account and saw the fee automatically deducted from my account that I found out about it.

Secondly can the bank forcibly decide to charge these fees placing the account into the red/negative.

  • 1
    BofA is particularly aggressive in its banking fees, especially for small accounts. – user3270 Aug 31 '18 at 14:04

Was there a message posted in your online account, or on one of your statements, before the fees started? I'll bet there was. That was your notice.

Take a look at the Account Agreement or similar document that you were given when you opened the account. I'll bet it includes the following:

  • The bank has the right to change the terms of the account, including fees, at any time, as long as they give you notice (see below). You would then have the option to close your account; if you don't, that constitutes acceptance of the new terms.

  • Notice of account changes can be given by a message in your online account (which you'd have to log in to know about) or on your monthly statement (which you also have to log in to see). They don't have to be given by mail (particularly since you've opted for an "e-banking" account) nor by email (which banks typically say is too insecure).

Such terms are pretty common and I'm not aware that they have ever been found illegal. So if this is the case, then it would appear that the bank did what it promised, and legally it's your fault for not logging in to check your account more often.

Secondly can the bank forcibly decide to charge these fees placing the account into the red/negative.

Yes, the new terms would be that you agreed to have the fees deducted from your account, whether there's enough money there or not. If your balance is negative then you are now in debt to the bank, and they can do the usual things to try to collect - sending nasty letters, reporting the delinquency to a credit agency, and in principle, suing you.

  • The one thing that might get the bank in trouble is changing the account type. It's not immediately obvious whether this counts as a change in terms on the account the customer agreed to, or signing the customer up for a new type of account without consent (ala Wells Fargo, which wouldn't have been hit with fines if the terms and conditions were carte blanche for subjecting customers to the terms of different account types). – Ben Voigt Sep 1 '18 at 23:23
  • @BenVoigt: In this case it sounds like the account was originally a checking account, and still is. The change in name from "e-banking" to "core checking" is just branding and doesn't have any legal significance that I know of. The big scandal with Wells Fargo was things like taking a customer with a checking account and opening a line of credit for them, which has a completely different function. Also, AFAIK Wells Fargo didn't notify their customers by any means to give them a chance to opt out. – Nate Eldredge Sep 2 '18 at 15:55
  • It sounds like it was originally a deposit account, and now is a line of credit (the only way you can have a negative balance in a checking account is if the bank is extending credit). A checking account with maintenance requirements is a totally different function from an as-you-go deposit account. – Ben Voigt Sep 2 '18 at 16:27
  • A line of credit is when the bank gives you money at your request. When your account goes negative because of fees imposed by the bank, I don't think that's treated like a line of credit for legal purposes. It's just recording your failure to pay fees that you agreed to pay, and that you now owe to the bank. It can happen with any kind of account. – Nate Eldredge Sep 2 '18 at 21:47
  • No, with a pure deposit account you don't owe those fees to the bank. You just won't receive the service that you haven't paid for. – Ben Voigt Sep 2 '18 at 22:05

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