Consumer banks are in the business of offering financial services directly to members of the public. There are usually local branches throughout the community that are part of larger commercial banks.
Sometimes referred to as retail banks, as opposed to wholesale banks, consumer banks provide a whole host of services to individual customers. This may include personal loans, mortgages and checking and savings accounts.
Consumer banks are no less prone to issues with the public. While the problems may vary, some of the more common consumer complaints include the following:
- Discrimination in lending: There are laws that prohibit a bank from utilizing discriminatory practices on the basis of a consumer’s protected characteristic, such as race or gender.
- These practices are considered a form of redlining in which the bank denies mortgage loans or issues only a certain number of loans to members of the public who reside in low-income, minority communities.
- The bank’s redlining tactics may be subtle, in that the bank may not expressly deny the loans, but may achieve this result through the methods it employs. Examples include providing financing with excessive fees or higher interest rates than the bank knows the customer can afford;
- Violations of Banking or Lending Laws and Statutes: Banks are heavily regulated and must comply with these laws when dealing with the public. Examples of regulations governing banks include the Truth in Savings Act (TISA).
- The TISA regulates how banks can advertise about its services. When you decide to open an account with a particular bank, it is often because the bank has the lowest fees when compared to another bank.
- The TISA protects you in this situation because it requires that the bank disclose information in its marketing pieces that is easy to read and includes information about interest rates and fees. The regulations provide that the bank’s obligation to disclose information is ongoing; and
- Deception or Loan Fraud: Your bank is required to provide you with accurate information when you apply for a loan. Likewise, when you apply for a loan, you also are required to provide accurate information so the bank can determine whether you qualify for a loan. Omitting or misstating information during the loan process is considered loan fraud.
- Another type of loan fraud is called predatory lending. Predatory lending occurs when a lender structures a loan that benefits the bank but not the customer. For example, offering a customer a loan that the customer doesn’t need or obviously cannot afford would be considered predatory lending.
If you believe your bank has violated a law or you have a dispute stemming from the service you have received, there are several things you can do to try to resolve the dispute. These steps include:
- Contact Your Bank: Banks are in the business of working with the public and they are competing with each other to retain their customers. Therefore, you should in the first instance try to work with the customer service department. Many issues with banks arise in the course of doing business so banks regularly resolve most of these complaints before they escalate further;
- Contact the Federal Deposit Insurance Corporation (FDIC): You can file a complaint with the FDIC. The FDIC investigates all types of complaints from the public about FDIC institutions and educates the public about consumer laws and regulations. The FDIC’s website explains what you need to put in your complaint, such as the full name and location of the bank, the type of product involved, the full details about the issue, and a description of the resolution you are seeking;
- File a Complaint with the Federal Reserve: The Federal Reserve is the government institution that supervises and regulates banks. If you believe your bank has violated a law or statute by engaging in unfair, misleading or discriminatory practices, you can file a complaint with the Federal Reserve. The Federal Reserve will connect you with or forward your complaint with the appropriate federal regulator for the bank. The appropriate federal regulator will begin an investigation into your complaint. Keep in mind that the Federal Reserve cannot resolve all complaints, such as those dealing with contracts or those that are the subject of a pending lawsuit; and
- Sue Your Bank: As indicated above, the consumer banking regulatory agencies are limited in the type of disputes they can try to resolve. If you have exhausted all other options, you may consider suing the bank to resolve your dispute.
Consumer banks are heavily regulated and there are agencies that can respond to your disputes if dealing directly with your bank has not resolved your dispute. Most disputes are resolved either by contacting the bank or these regulatory agencies.
If after doing so you would like to pursue legal action against the bank, working with a finance attorney can be helpful. Your attorney can provide the legal research and advice needed for you to succeed on your claim.