Recently I pulled my credit report to do a review of my finances. All was fine except for one thing: a late payment from 2009. I didn’t recall ever opening a credit card with this bank, so I immediately called them to ask what was up.
Turns out, my old checking account opened a line of credit when I overdrafted, which was then reported to the credit bureaus. That made sense. But what didn’t make sense to me was why the bank had held onto my information. Not only could the bank rep I spoke with see data on my swipes at Duane Reade, he knew of my penchant for late-afternoon Starbucks. Did they need to know I ordered a soy iced chai latte in 2009?
Nessa Feddis, senior vice president of the American Bankers Association, offered some insight. Though she’s “not aware of any specific statutory requirements” for banks to hold onto account information, she said, other limitations may come into play.
“A bank would need to be able to have their records in order to investigate a dispute,” she said, and “similarly, a customer may need records if the IRS was investigating tax returns.” Think things like proof of payment and other transactions. Again, “there is no rule, but other laws, like the Fair Credit Reporting Act, make having the information important.”
A cursory search online found several banks hold onto information for about seven years. TD Bank, for instance, said they “retain seven years of account history in our records.” And on the Help Center section of its site, Chase says customers enrolled in paperless statements can view up to six years of statement history online for credit card accounts and up to seven years of statement history online for checking, savings and auto finance accounts.
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The relationship you have with your bank is a deeply personal one. Think about it: Money carries enormous weight in people’s lives, and where do they keep their money? A bank, usually. In addition to your money, your bank also stores a ton of your sensitive personal information.
So when Brady Cook was a victim of a data breach, he was really surprised by the way his bank handled it. One day in early March, Cook received a letter from Wells Fargo, with some jarring news:
“We want to let you know on January 20, 2016, a Wells Fargo internal investigation discovered an employee accessed your account information without a legitimate business purpose and emailed an image of your profile information to an external Internet site that provides disposable mailbox accounts.”
That image included his name, address, birthdate, phone number, account numbers and Social Security number. The letter went on to tell him that the employee had been fired, that Wells Fargo contacted the email provider and had the information deleted, and that Wells Fargo would provide Cook with 2 years of free credit monitoring and identity theft protection services.
And that was pretty much it: More than a month after the bank discovered the breach, Cook opened his mail to find out some of his most sensitive information had been compromised.
“For something that is so personal and I trust them with, this is a very impersonal measure,” he said of the letter. When we talked to Cook right after he received the letter, he was dissatisfied with the information he was given, and he had lots of questions.
“It’s just very passive. It says we assure you that it no longer exists — well no duh, that’s the point of a temporary email account,” he said. “But for the 15 minutes that it exists, what the hell happened to it?”
Wells Fargo Responds
Cook wanted to know why an employee was even capable of taking a screen shot of his information in the first place. He wanted to know why he only got 2 years of identity theft services, when what this former Wells Fargo employee did puts Cook at lifelong risk of having his identity stolen. (A Social Security number is the holy grail of identity theft, because unlike a bank account number, you can’t easily get a new one, and it can be used to commit fraud in dozens of ways.)
We put each of these questions to Wells Fargo, and they responded to us by email. Here’s what a bank spokesman had to say.
On the 2 years of identity theft services: “24 months of identity theft protection service is an industry standard in these types of cases. We encourage all customers to monitor their accounts and credit on a regular basis, and to do so more closely for the 24-month period after any event that results in the inappropriate exposure or potential exposure of personal or account information, regardless of the cause. If the customer has specific concerns at the end of the 24-month period, we encourage them to contact us.”
In response to the question about why an employee can take screen shots of customer information: “We train our team members on the proper handling of customer information, and continually enhance our policies, procedures, and technology to protect customer information. Unfortunately, despite our best efforts and the training we provided, this individual chose to act in a manner that is inconsistent with our policies and procedures.”
The bank also sent a general statement, saying it has reached out to customers affected by the incident, indicating that Cook was not the only person whose information was compromised. Citing the ongoing investigation, Wells Fargo declined to say how many customers were affected by the former employee’s actions.
The ‘Industry Standard’
It’s true that some sort of complimentary identity theft services is the olive branch financial services typically extend to their customers after a data breach. A few years ago, a year of free services was more common, but as data breaches continue to become an almost normal part of a consumer’s life, that time frame has gotten a little longer.
“A lot of the institutions have gone from one year to two,” said Adam Levin, co-founder of Credit.com and an author of “Swiped”, a recently-published book on the growing threat of identity theft. “There are many people who feel it should be 10. It’s anybody’s guess to if and when something’s going to be used.”
The specific service Cook received was a custom product from Identity Guard, which includes quarterly credit updates, credit reports and scores from each of the three major credit reporting agencies, identity theft victim assistance and $20,000 of identity theft insurance.
Cook has been monitoring his credit (you can do that by getting two free credit scores with regular updates on Credit.com, as well as pulling your free annual credit reports) and, so far, he hasn’t seen any evidence of identity theft. It has now been almost five months since he got that letter from Wells Fargo, and while he says his frustration isn’t as intense as it initially was, he’s still bothered by what happened. The whole experience made him want to cancel his accounts with Wells Fargo, but in the end, he only closed some business accounts he had with the bank.
“I have had accounts with them for over 12 years and I can’t just close those accounts and cards without temporarily hurting my credit,” he said in an email. “I have some high-limit credit cards with them and it helps my utilization ratio since I never get [above] 10% on that card. Also closing accounts and opening new ones requires more credit pulls and other things.”
Cook summed up his experience — and the experience of any victim of a data breach — pretty well in that email: “It’s just a damn hassle.”
Checking accounts have long been a staple of Americans’ finances, but growing fees are making them more expensive to maintain. The average monthly maintenance fee on a checking account is $13.29, up 20 cents in the last 6 months, according to an analysis from MoneyRates.
Banks often waive maintenance fees if customers keep a minimum balance in their checking accounts, but that’s no easy task. The average minimum balance to get a fee waiver is $6,847.49, an increase of about $800 from six months ago, MoneyRates reported. Not only do many people not have the luxury of having a huge spending cushion in their checking accounts, letting nearly $7,000 sit in a checking account to avoid a $13.29 monthly fee (or $159.48 annually) may not be the best use of that money. Pretty much any other financial instrument will give you a greater return on your money than a checking account, where interest rates are at 0.04% as of March 14, according to the FDIC.
MoneyRates determined its figures by analyzing fees and minimum balance requirements at 100 banks of various size. MoneyRates found that large banks (those with more than $10 billion in deposits) tend to have higher fees than medium and small institutions and almost twice the minimum balance — $11,674.09 — for a maintenance fee waiver.
It’s important to note that many financial institutions do offer alternate ways to have a checking account maintenance fee waived. Some banks, for instance, won’t charge you if you use direct deposit, have a certain amount of money in a savings or investment account with them or use a linked debit card to make a certain amount of purchases.
“There are a variety of conditions banks set under which they will waive fees,” MoneyRates said in an email. “Rather than trying to guess which conditions a given customer could or could not meet, for the purposes of our survey we considered free checking to be only those accounts which were unconditionally free of maintenance charges.”
Overall, only about a quarter of the banks studied offered free checking accounts, and they’re mostly online banks: 53% of online banks don’t have account maintenance fees, while only 22% of branch-based banks can say the same.
Account cost is among many things consumers need to consider whenever choosing a financial product. As far as checking goes, maintenance fees are just one part of that. There are also potential costs like out-of-network ATM fees and overdraft fees. Oftentimes, you can avoid paying such fees by planning ahead and reviewing your account terms and conditions for potential fee waivers. You should also pay close attention to your account balance as part of your regular personal finance routine, which should also include things like reviewing your free annual credit reports and getting a free credit report summary every month on Credit.com.