CFPB States Reopening Closed Accounts May Violate The CFPA

On May 10, 2023, the Consumer Financial Protection Bureau (“CFPB”) issued Consumer Financial Protection Circular 2023-02 (“CFPC  2023-02” or the “Circular”). In CFPC 2023-02, the CFPB considers the following question:

After consumers have closed deposit accounts, if a financial institution unilaterally reopens those accounts to process a debit (i.e., withdrawal, ACH transaction, check) or deposit, can it constitute an unfair act or practice under the Consumer Financial Protection Act (CFPA)?

The Circular discusses aspects of the process for closing a consumer deposit account, including notice periods and bringing the account balance to zero. In addition, CFPC 2023-02 highlights common features of account agreements, such as the depository institution’s lack of liability for returning deposits and debits received by the institution after account closure.

The Circular also discusses the consumer implications of reopening closed deposit accounts without consumer permission. First, consumers may incur various fees, including overdraft, non-sufficient funds (“NSF”), and account maintenance fees. Second, credits processed to reopened accounts may result in third parties having unauthorized access to those funds. In short, the unauthorized reopening of deposit accounts could result in substantial consumer harm.

To summarize, the CFPB concluded that reopening closed deposit accounts without consumer permission can constitute an unfair act or practice. The CFPB further noted that reopening a closed deposit also could be a deceptive or abusive act or practice and violate other applicable laws, including state laws, depending on the circumstances.

In light of this Circular, financial institutions should assess their practices related to forced account reopening after closure. If your institution needs assistance in assessing the impact of Consumer Protection Circular 2023-02 on your institution, RiskExec has a team of former bankers, regulators, and fair banking officers that can help. We are proud to help advance consumer protection. You can find out more about our solutions at or by contacting me at

Lynn Woosley is a Managing Director with RiskExec. She has more than 30 years’ risk management experience in both financial services and regulatory environments. She is an expert in consumer protection, including fair lending, community reinvestment, and UDAAP.

 Before joining RiskExec, Lynn led the fair banking practice for an advisory firm. She has also held multiple leadership positions, including Senior Vice President and Fair and Responsible Banking Officer, within the Enterprise Risk Management division of a top 10 bank. Prior to joining the private sector, Lynn served as Senior Examiner and Fair Lending Advisory Economist at the Federal Reserve Bank of Atlanta.

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