Consumer banking in Texas refers to the financial services provided by banks and other financial institutions, such as credit unions, to individual customers rather than businesses. This includes a range of products and services designed to meet the financial needs of average consumers, such as the following:
- Checking and Savings Accounts: Basic accounts for everyday transactions and savings.
- Loans: Personal loans, auto loans, and mortgages to help consumers finance purchases.
- Credit Card Services: Various credit options for consumers to manage spending and build credit.
- Investment Products: Certificates of deposit, and sometimes such products as options for investing in stocks, bonds, mutual funds, and other investments.
Can You Sue a Bank for Disclosing Personal Information in Texas?
It is possible to sue a bank for the wrongful disclosure of a customer’s nonpublic personal information. However, as with many lawsuits, whether the lawsuit is successful would depend on the specific circumstances of the disclosure in the customer’s case. Banks must deal with a range of complicated regulations. There are regulations that protect consumer data. But banks are also allowed to share consumer data in some cases.
Banks and other financial institutions are able to share customer data for certain lawful reasons as a routine part of their operations. If a bank shares information with affiliated companies for marketing purposes, they must give the customer notice and a way to opt out of the sharing. They are also permitted to share data with third-party service providers when it is necessary to complete a transaction, e.g., with companies that process payments of mail account statements.
Of course, banks, like every other entity, must share information if ordered to do so by a court order, a grand jury subpoena, or a search warrant. In addition, institutions have a legal duty to report suspected illegal activities, e.g., money laundering or terrorist financing, to government agencies such as the Financial Crimes Enforcement Network (FinCEN). These disclosures are mandated by both federal and Texas law.
Among the federal laws that apply to banks and other key entities involved in commercial financial transactions are the following:
- The Fair Credit Reporting Act (FCRA) is a federal law that governs the way that credit reporting agencies can collect, use, and share consumers’ financial information. The main purpose of the FCRA is to promote accuracy, fairness, and privacy in consumer credit reporting.
For example, a consumer’s credit history is regularly accessed by various entities, such as employers, retailers, banks, and even landlords. The FCRA regulates the uses they can make of the information.
- The Fair Debt Collection Practices Act (FDCPA): The FDCPA makes it illegal for a collection agency’s debt collectors and other debt collectors, e.g., banks, to call a debtor before 8 a.m. or after 9 p.m. in the debtor’s time zone. The FDCPA also forbids debt collectors from doing the following:
- Calling a debtor at work
- Harassing a debtor
- Using obscene or abusive language
- Making false or misleading statements
- Adding unauthorized charges to the debt
- Making threats; for example, a debt collector cannot threaten to report the debt to the police or otherwise suggest that the police can become involved.
A debtor has the right to demand that the collection agency stop contacting them. The only exceptions would be that the collector can tell the debtor that collection efforts have ended or that the creditor or collection agency is going to file a lawsuit to collect the unpaid debt. Keep in mind that a debtor’s demand that a debt collector stop contacting the debtor must be in writing.
In Texas, Can You Sue a Bank for Denying a Loan?
If a bank were to reject a person’s loan application because they are a member of a protected class, then they would be liable for discrimination. The protected classes are as follows:
- Race
- Age
- Gender
- Gender identity
- National origin
- Religion
- Sexual orientation
- Age (40 years old and over)
- Disability
- Marital status
- Pregnancy.
If a bank were to engage in lender discrimination, then a loan applicant whose application was denied might have grounds for a lawsuit.
Otherwise, a bank is free to make a commercial decision and reject a loan applicant for basically any reason. Generally speaking, a bank makes its lending decisions on the basis of its underwriting standards, which include the following factors:
- Whether the borrower has an established employment history and what it shows
- The information in the borrower’s financial statement
- The borrower’s credit report
- Whether the borrower appears financially able to repay the loan, given their current income, employment, and debt
- Whether the borrower would offer some collateral to secure repayment of the loan
- Whether there is a guarantor for the loan, i.e., another person who agrees to repay the loan if the borrower fails to make payments as required by the loan agreement.
If a person has applied for and been denied a loan, they should ask the lending institution to review the application and provide an explanation as to why the loan was denied. The lender should be able to explain in an understandable way how the finances of the person made it impossible for the lender to make the loan.
Of course, if the lender cannot offer such an explanation, then the person may want to have a legal consultation in Texas with a Texas lawyer to discuss the denial of their loan application and to assess whether it involved lender discrimination.
Other laws and regulations apply to commercial banking institutions. For example, the Truth in Lending Act (TLA) gives consumers protection from unfair lending practices as follows:
- Clear Disclosure: The TLA requires that lenders give borrowers clear, detailed information about the terms of a loan. The information must include the annual percentage rate (APR) that the bank is charging, the total cost of the loan, and the total amount that has to be repaid over the entire life of the loan. This allows consumers to compare different loan offers from different lenders more effectively.
- Right of Rescission: For certain types of loans, such as home equity loans or mortgage refinancing loans, the TLA requires a “cooling off” period of time during which the borrower can back out of the loan agreement altogether without paying a penalty.
- Accurate Advertising: The Act has strict guidelines for how loans can be advertised to prevent misleading or deceptive practices. For instance, if an ad states a rate of finance charge, it must state the rate as an “annual percentage rate.”
- Limitations on Practices: The Act also limits certain loan practices, such as imposing penalties for prepayment of a loan and clauses that require borrowers to arbitrate disputes instead of filing a lawsuit.
The Federal Trade Commission (FTC) is one of the federal agencies that enforces the TLA. If a person believes that a lender has violated the TLA in their case, they can file a claim with the FTC. The FTC can take a range of actions in response to the complaint, including investigating, imposing fines on the lender, and/or taking legal action to stop the lender’s practices.
When Can You Sue a Bank in Texas?
Before suing a bank in Texas, a consumer should consider submitting a complaint to one or more of the several government agencies that enforce banking regulations and laws. These agencies are allowed to investigate and may well be able to offer a solution to a consumer’s problem.
- The Federal Reserve Board: If a person has a complaint about one of the well-known big commercial banks, such as Wells Fargo, Bank of America or Chase, the Federal Reserve System might offer the help a consumer needs. The Federal Reserve Bank is responsible for enacting banking regulations and enforcing those regulations and many federal laws that are designed to protect consumers from predatory practices on the part of commercial banks.
The Board of Governors of the Federal Reserve in Washington, D.C., works with 12 Federal Reserve Banks (FRB) across the nation to make sure that commercial banks obey these laws and regulations. The Federal Reserve can help individual consumers as follows:
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- Answering questions about banking practices
- Investigating complaints about specific banking practices.
If it receives a complaint that is not one that an FRB handles, the FRB would refer them to the federal agency that does handle it.
- Consumer Financial Protection Bureau (CFPB): The federal CFPB also accepts complaints from consumers. They usually relate to such banking products and services as loans, credit cards, or debt collection. The CFPB, like the FTC, investigates complaints by gathering information about the business and its practices.
If the CFPB finds a violation, it can take enforcement action, which may involve collaborating with other agencies or bringing a lawsuit against the business.
The CFPB can impose fines on businesses that violate consumer financial protection laws. It can also order businesses to change their practices or provide remedies to consumers, such as refunds or loan modifications.
- Texas State Attorney General: Texas has an attorney general who is the state’s top legal officer. Most attorneys general accept complaints from state residents who have consumer issues, including complaints against banks and other companies that provide financial services. They investigate the complaint and work to negotiate a resolution.
How Do You File a Lawsuit Against a Bank in Texas?
If an individual does not get the help or remedy they need from a federal or state government agency, they may always turn to the civil courts in Texas. It would probably be a good idea to consult with a Texas financial lawyer before filing a lawsuit in court. A person would want to know that they have a claim that has merit under the applicable law.
They would then get advice as to how much they could recover as compensation for the harm they have suffered and in which court to sue.
A person can sue for up to $20,000 in a Texas small claims court. A person must represent themselves in small claims court. A person can sue for amounts over $20,000 in a Texas district court. A person can be represented by a lawyer in a Texas district court.
Do I Need a Texas Lawyer To Sue a Bank?
If you have a significant issue with a bank in Texas, you want to talk to a Texas financial lawyer. Your lawyer will be able to review your situation, tell you whether you have grounds for a complaint, and guide you to the right agency or the right court, depending on the remedy you need and deserve. Banking issues can be technical, and you need the help of a Texas financial lawyer to handle them professionally.
