Fighting a bank error - or was it an error?

The problem faced by the Mannings with Harleysville National Bank (now First Niagara Bank), which I wrote about in Sunday's Consumer 10.0 column and blogged about yesterday here, raises lots of questions. Today I'm going to focus on two of the most basic: How can you tell if your bank is giving you bum information, and what to do if you think something has gone wrong.

If that happens, you face a couple fundamental problems. The first is that the rules are often complicated - as the Mannings found out when everyone told them they were out of luck, and out $5,200, when the actual federal rules say otherwise. The second is that because of our fragmented regulatory system, it's often not clear where to turn for information or to file a complaint. 

Unless and until Congress passes President Obama's proposal for a Consumer Financial Protection Agency, you're stuck with the current alphabet soup of regulators: the FRB, the OCC, the FDIC, and so on till your head spins. But since the Federal Reserve writes the rules for all banks (even though it regulates only a fraction of them), it's as good a place as any to start. Though they're sometimes hard to find, the Fed's consumer-information Web pages do answer some frequently asked questions.

One of my favorites is a series titled: "Can a bank really ... ?" It asks whether your bank can legally:

  • post withdrawals from my account from the largest dollar amount to the smallest to get more overdraft fees?
  • wait to give me access to the money that I deposit?
  • refuse to cash my check?
  • increase the rate or add fees to my credit card account?
  • change the terms on my deposit account?
  • ask me for additional information when I make a large deposit or withdrawal?
  • keep the rate on my mortgage loan the same even if the Fed lowers the interest rate?
  • send me a notice stating that I'm denied credit even though I did not apply for a loan?
  • not give me back my checks?
  • require me to have photo identification (ID) to get a loan or open a deposit account?
  • require an escrow account for my home loan?

The answers don't drill especially deep, and may not satisfy a consumer who believes "there oughta be a law" and wants to know what it is right away.  But it sometimes provides links to the actual rules. And home page for Federal Reserve consumer information, here, addresses many common consumer issues.

Here's the Fed's answer to the question, "Can a bank wait to give me access to the money that I deposit?":

"Banks can place 'holds' on checks for a variety of reasons. Most commonly, banks hold a check because the collection of the money may be in doubt or the check looks suspicious for some reason. Holds may also be placed when a large dollar amount (more than $5,000) is deposited or when funds are deposited into a new customer's account. A federal law, the Expedited Funds Availability Act, contains rules that allow banks to delay or "hold" funds deposited by check. You may want to review the account agreement you received when you opened your account for details about your bank's funds availability policies and procedures. A bank must give you a copy of its deposit availability disclosure upon request."

Strangely, I couldn't find answers on the Fed site to some of the questions raised by the Mannings' case about cloned-debit-card fraud. But there are some on a Federal Trade Commission page titled, "Credit, ATM and Debit Cards: What to do if They're Lost or Stolen."

Finally, there's the question of what to do if you're convinced you were wronged, get no satisfaction from higher-ups on its chain of command, and want to file a formal complaint.

For a national bank, you have to complain to the Office of the Comptroller of the Currency, which has a "Help With My Bank" page here. For others, try going to the "Help Center" of the Federal Financial Institutions Examinations Council to see which regulator oversees your particular institution.

The FFIEC's tag line is, "Promoting uniformity and consistency in the supervision of financial institutions."

There's got to be a better way to do this.