Published: September 2013

Making banks compete for your business

The Freedom and Mobility in Consumer Banking Act, introduced by Senator Tom Harkin (D-IA) and Congresswoman Jan Schakowsky (D-IL), aims to help consumers switch bank accounts easily without the hassle and fees.

Consumer Action joins coalition advocates in supporting the Freedom and Mobility in Consumer Banking Act. The bill provides consumers the right to close an account at any time, at no charge, regardless of whether the balance is positive, zero, or negative. Leftover funds will be sent by certified check or by electronic transfer to the consumer’s new account.

A 2012 report by Consumers Union, “Trapped at the Bank,” found consumers can encounter myriad problems in switching banks accounts such as delays and uncertainty regarding automatic transfers, fees, or banks reopening closed accounts. The report also found that bank disclosures typically fail to contain even rudimentary information to help consumers in closing an account.

“It should be easy for consumers to place their money in a financial institution of their choice.  But, today, too many hardworking families, in particular those of modest means, do not have the flexibility to close an existing account and move institutions,” said Senator Harkin. “The commonsense legislation we are introducing today will allow consumers to easily and fairly move their money, which will also help make our banking system more competitive.”

For consumers with negative balances, the bill requires institutions give consumers at least 30 days to remit payment prior to the institution’s initiating any collection activity, or reporting to a third party. It also prohibits institutions from reporting to consumer reporting services regarding overdraft or other fees assessed by the institution, to protect consumers from being shut out of the banking system due to negative consumer reports.

Lead Organization

Americans for Financial Reform (AFR)

More Information

For more information, please visit Senator Harkin's website.

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