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Dave Kennett
Dave Kennett, Attorney
Category: Business Law
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Experience:  25 years practicing law
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I have a small business and have all my eggs in one basket.

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I have a small business and have all my eggs in one basket. i.e. Wells Fargo. My business is 4 months old and I am in the salon retail business. I sell expensive shearsw and provide financing. The financing is done through flexi checks, which basically are regular payments withdrawn from the customers' account. I had one customer who had nsf (insufficient funds) 2 months in a row. Wells Fargo has shut down my account and they no longer will take the flexi checks. Wells Fargo claims that I am a risk to the bank because of the flexi checks.     I know that this is used all over the US and I have the proper paper work and signatures from the customer to debit their accounts. Please advise what recourse I might have.

Submitted: 7 years ago.
Category: Business Law
Expert:  Dave Kennett replied 7 years ago.

DearCustomer- I'm not certain why your customer being overdrawn would concern your bank unless it caused your account to become overdrawn. Most banks simply put holds on deposits in order to give the checks, whatever kind, time to clear. Obviously you are at risk anytime you accept checks from customers but it is your risk, not the bank's.


Of course a bank is a private company and is permitted to evaluate its customers and their accounts. If a bank chooses to close an account they are permitted to do so and there's really no legal action I know of that you, as the customer can take unless they are wrongfully withholding your funds for some reason.


Taking on a bank in a legal matter is very expensive so my general advice is to find another, more reasonable bank that can meet your needs. By the time a case against a bank got through the courts you would be ready to retire! Unless you can find a manager at the bank who you can talk to and work out some way of accepting these checks with a hold on them for clearance I see nothing you can do legally to force the bank to reopen your account.


Dave Kennett

Customer: replied 7 years ago.

My account is in the positive by thousands. Also, I know of other distributors in the country that are doing the exact same thing that I am doing and bank with Wells Fargo. I have been banking with Wells Fargo for 29 years with my personal account. I was warned not to use the flexi checks any more. I spoke with the bank business manager as to why I was being warned not to use the Flexi checks method anymore. He called Loss prevention and they had nothing on my account. When hearing that, he went ahead and deposited the flexi checks on the 30 th of July. I received a copy of the letter from Deposit Operations Service Center stating that my account is on hold and if in the positive they will refund and mail via cashier's check the remaining balance. As a result of the lack of information provided by Wells Fargo internally, the branch business manager acted in good faith depositing my Flexi Checks. I followed the rules every step of the way and find the results very problematic. I want to know why I am being shut down and are the actions legal without providing me the customer an answer

Expert:  Dave Kennett replied 7 years ago.

Well obviously I don't work for Wells Fargo so only they can tell you exactly why they made the decision they did. As I said above, they are a private company and have the right to make business decisions about their customers unless they are discriminating due to race or some other protected area. I would suggest going back to the person who told you to deposit these checks to see if he can solve the problem that it appears he caused.


What a bank does with other customers is not necessarily relevant to your account since every account is different. I certainly understand your frustration with the bank as I know how they operate with little regard for the individual. You say you didn't receive a reason but in your initial question said the reason given was that you were a risk to the bank.


Without filing a suit against the bank I doubt you can force them to provide any further information. That is why I suggested that you try to work with the person who told you to deposit the checks and see if he can gather more specific information. Obviously the operation of your business is more important than finding out why some bank employee made a stupid decision. You probably should at least start a new relationship with a different bank who might like to have your business.



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