Consumer Banking

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 What Is Consumer Banking?

When banks provide financial services to average, ordinary people, as opposed to businesses, they are engaged in consumer banking. The services included in consumer banking include credit card services, checking and savings accounts and personal loans. Consumer banks also provide mortgage 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 the privacy of their nonpublic personal information (NPI). Basically, if a bank shares a person’s nonpublic personal information with another entity, a person can file a complaint with the Federal Trade Commission (FTC).

Nonpublic personal information includes information consumers provide to banks in the course of applying for a financial product or service, such as a mortgage loan. It also includes information that banks obtain about a customer in the course of conducting a financial transaction with the customer. Examples of NPI may include:

  • Income: A person’s income is clearly personal information;
  • Monthly Expenses: A person’s monthly expenses are personal information as well;
  • Social Security Number: Of course, a person never wants their social security information made public or shared without their knowledge and consent;:
  • Other information on an application for a credit card or bank account.

To be considered NPI, the information must be information that is not publicly available. Publicly available information is 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. It also requires banks to share with customers the businesses to which the bank may provide the information. If a bank intends to share a person’s NPI with another entity, the bank must give the person the choice to ‘opt out.” This means that a person has the right to refuse the sharing of their NPI with anyone.

The bank is legally obligated to honor a person’s opt-out request. Consumers generally may block the bank from sharing NPI with outside companies. As mentioned above, if a bank does share NPI, whether negligently or intentionally, a consumer may file a consumer complaint with the FTC.

The FTC investigates complaints filed by consumers. If the FTC’s investigation reveals that the bank has violated the GLBA, the FTC may penalize the bank and bank employees who are responsible for the violation. Penalties can include monetary fines and even prison time for bank employees who are responsible for the violation. The GLBA does not authorize private rights of action; that is, individuals cannot file private lawsuits against a bank in civil court for a GLBA violation.

Can You Sue a Bank for Denying a Loan?

Under some circumstances, a person would be able to sue a bank for its refusal to provide them with a loan. For example, if a bank has denied a person a loan for a discriminatory reason, i.e. on the basis of the person’s membership in a protected class, that would be the basis for a lawsuit. Protected classes are race, color, national origin, gender, religion and other factors as well.

A person would file their lawsuit in a federal district court. To succeed with such a lawsuit, the person would have to prove the bank intentionally discriminated against them on the basis of their membership in a protected class, again, for example, race, gender, color, or national origin. This can be a difficult undertaking that requires proper proof and evidence; an attorney can assist with these types of claims.

When Can You Sue a Bank?

A person may also be able to sue a bank when a specific law allows them to do so. Three federal laws that guarantee rights to consumers are the Truth in Lending Act (TILA), the Fair Debt Collection Practices Act (FDCPA), and the Fair Credit Reporting Act (FCRA). Under the TILA, banks must provide consumers with accurate information about their credit transactions with the bank. This means banks must provide accurate information about the rate of interest, monthly payment, and other clearly relevant information about mortgages and credit loans that a customer may seek.

Under the FDCPA, banks may not, among other things, harass a person who owes a debt to a bank, or share inaccurate information in an attempt to collect a valid debt. Under the FCRA, a person may be able to sue a bank because it has refused to remove false information that it has placed on their 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 relatively small amounts of money, e.g. $10,000 or less. Every state has a small claims court system with its own limitation on the amount of damages that can be sought and filing procedures.

Generally, to file a claim in small claims court, a person 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 a person money and refuses to pay. For example, if a bank, in penalizing a person for insufficient funds, charges them the penalty fee three times instead of once, the person can sue to recover the money the bank improperly took out. An insufficient funds penalty is charged by the bank if a customer writes a check when the customer does not have the money in their checking account to cover the check.

If a person should believe that they have a legitimate claim against a bank that is possibly worth more than the small claims court limit, they would want to consult a civil litigation attorney to discuss their options.

Do I Need a Lawyer to Sue a Bank?

As you may imagine, suing a bank would not be an easy task, even if you believe that right is on your side. 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 want to know. This information includes all documentation relating to your claim, including financial documents. A summary of events that have taken place in connection with your case, including dates, would also be helpful.

An experienced bankruptcy lawyer can explain your rights and options. The lawyer can also assist you in preparing a lawsuit and can represent you in court. State laws on banks may vary, so it’s important to work with a lawyer who can explain the laws in your area clearly.


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