Consumer banking, also known as personal banking, provides financial services to people as individuals, not as business owners. Examples of consumer banking services include credit card services, checking accounts, and savings accounts. Consumer banks also provide mortgage loans, personal loans, and certificates of deposit (CODs).

Can You Sue a Bank for Disclosing Personal Information?

A federal law known as Gramm-Leach-Bliley Act (GBLA) regulates how banks may handle consumer information. Under the GLBA, consumer banking customers have rights with respect to their nonpublic personal information (NPI). This information includes information consumers provide to banks to obtain a financial product or service, as well as information banks obtain about a consumer from a financial transaction with that consumer.

Examples of NPI include:

  • Income;
  • Monthly expenses;
  • Social security number; and
  • Other information on an application for a credit card or bank account.

To be considered NPI, the information cannot be publicly available. Publicly available information includes information that appears in public records, such as telephone books, land records, and driver license information available from state motor vehicle departments.

The GLBA requires banks to tell customers about what kinds of information the banks collect, and what businesses the banks may provide the information to. If a bank intends to share your nonpublic personal information with another entity, the bank must give you the choice to ‘opt out” (say “no”) to that sharing. The bank must honor yout opt-out request. Consumers generally may block the bank from sharing NPI with outside companies. If a bank negligently or intentionally shares such information, a consumer may file a consumer complaint with the Federal Trade Commission (FTC).

The FTC investigates the complaint. If the FTC finds the bank has violated the GLBA, the FTC may impose monetary fines and prison time on banks and bank employees who are responsible for the violation. Under the GLBA, there is no private right of action; that is, individuals cannot file private lawsuits in civil court against a bank.

Can You Sue a Bank for Denying a Loan?

Under some circumstances, you can sue a bank for its refusal to provide a loan. For example, if a bank has denied you a loan for a discriminatory reason (because of your color, gender, race, religion, or national origin), you may be able to file a lawsuit in federal court. To prevail in such a lawsuit, you must prove the bank intentionally discriminated against you on account of your race, religion, gender, color, or national origin.

When Can You Sue a Bank?

You may also be able to sue a bank when a specific law allows you to. Three such laws include the Truth in Lending Act (TILA), the Fair Debt Collection Practices Act (FDCPA), and the Fair Credit Reporting Act (FCRA). Under TILA, banks are required to provide consumers with accurate information about credit transactions. This means banks must provide accurate disclosures about the rate of interest, monthly payment, and other pertinent information about mortgage and credit loans.

Under the FDCPA, banks may not use, among other things, harassing techniques, or inaccurate information, in an attempt to collect a valid debt. Under the FCRA, you may be able to sue a bank for refusing to remove false information the bank has placed on your credit report.

How Do You File a Lawsuit Against a Bank?

Other than under the circumstances listed above, individuals usually may not sue a bank in civil court, unless a specific law permits it. However, under some circumstances, an individual may be able to sue a bank in small claims court. Small claims courts are specialized courts that hear claims involving limited monetary damages (damages of up to a certain amount only). Each state’s small claims court system has its own damages amount and filing procedures.

Generally, to file a claim in small claims court, you must file a document known as a complaint. The bank must receive a copy. The bank may then file an answer. Once the court has copies of the complaint and the answer, the court will set a trial date. At the trial, each side presents their evidence. The court then makes a decision.

Types of claims that can be filed against a bank include claims under which the bank owes you money and will not pay it. For example, if a bank, in issuing a non-sufficient funds penalty (a penalty for failure to have enough money in the account when you write a check), imposes the penalty three times instead of one, you can sue to recover the money the bank improperly took out.

Do I Need a Lawyer to Sue a Bank?

If you believe that a bank has violated your rights, you should consider contacting a financial lawyer near you. Before you contact the attorney, you should gather information about your claim that the attorney will ask you about. This information includes records pertaining to your claim, including financial documents.

An experienced bankruptcy lawyer can explain your rights and options. The lawyer can also assist you in preparing a lawsuit and in representing you in court.