Banks are closing more and more customer accounts, often without any justification. Fizkes – iStock/Getty Images Plus
Crypto is notorious for causing customers to go “rough” – colloquially for having the rug pulled out from under them by a service or project that suddenly disappears. But crypto isn’t the only place where this is happening. In recent years, the number of customers being victimized by their banks has increased dramatically.
In these cases, the rip-off isn’t that bad because the banks eventually give their money back. But the short-term impact is just as bad, with customers sometimes losing access to their bank accounts and credit cards for weeks, left to pay their bills or just get through the day. As The New York Times reported earlier this week, there is no exact data on how often banks do this, but there has been a 50% increase over the past two years in “suspicious activity reports” (SARs), which often result in harassment customers without warning.
The Times seemed to have little difficulty finding over 500 real-life examples of customers being abruptly turned away from their banks, citing numerous cases in which the decision was not only sudden but completely unjustified. This included businesses, students and everyday people who triggered a tripwire and were unable to do anything other than wait days or weeks for the bank to return their money. The reasons for the cutoffs are often a surprise, but the consequences are not:
“Individuals cannot pay their bills on time…If institutions close their credit cards, their credit scores may suffer. After a layoff, small businesses often struggle to process payroll – and have to explain to suppliers and partners that they don’t have a bank account for the time being,” the Times reports.
The justification for blocking the account in this way is rational enough. In the anemic language of bankers, it’s about “derisking”: if a customer account flagged by a SAR report could lead to fines or regulatory investigations, it makes sense to unfreeze it, regardless of the human toll. As one person who worked on the process told the Times, “It’s not humanized and it’s all just numbers on a screen.” It’s not, “No, this is a single mother who runs a babysitting business It says, ‘Hey, you’ve checked these boxes for a red flag – you’re out.’”
Strategically, it makes sense for banks to operate this way, but it’s also a terrible way to treat people – especially because it would cost little for them to introduce one or two measures to help innocent people , who are caught in the SARS manhunt.
That’s not to say that the crypto industry is better at respecting its customers – customer service is also terrible and there are dozens of novel ways you can get completely robbed. But it’s easy to see why a core message of crypto – that you can give yourself complete control of your own money – has become so attractive to so many.
Jeff John Roberts
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@jeffjohnroberts
DECENTRALIZED NEWS
Bitcoin rose above $36,000, while some analysts say the impact of upcoming ETF approvals is still not priced in. (CoinDesk)
HSBC introduces a new custody service that leverages technology rippleto enable institutional clients to store tokenized assets. (Bloomberg)
Ritual, A project aiming to integrate Web3-style decentralized services with AI has raised $25 million in seed funding. (Assets)
The DeFi Game of Yield Farming is generating hefty returns, with promised returns of up to 70% — in part because, as one trader put it, “crypto is the most FOMO industry ever.” (Bloomberg)
Binance announced the release of a self-hosted wallet on its app, saying the tool reduces barriers to entry for Web3. (The block)
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