Consumer complaint received 2020-12-27
Company: CHARLES SCHWAB CORPORATION, THE
State: GU
Product: Checking or savings account
Sub-product: Checking account
Issue: Closing an account
Sub-issue: Company closed your account

Complaint:
Dear Consumer Financial Protection Bureau, On XX/XX/XXXX, I received an online message ( # XXXX ; Reference ID XXXX ) informing me that my Schwab checking account would be closed due to my " residency outside of the United States in Guam '', despite Guam being a territory of the United States and a Guam address used to open the account in XXXX. The application form [ ( XXXX ( XX/XX/XXXX ) ] states, " All account holders must be either U.S. citizens or U.S. resident aliens, reside in the U.S. or one of its territories, and provide a U.S. mailing address. '' Furthermore, the Schwab domestic wire transfer form [ XXXX ( XX/XX/XXXX ) ] states, " This form is for domestic wire transfers only ( wires sent to the United States, Guam, Puerto Rico, the U.S. Virgin Islands, American Samoa and the Northern Mariana Islands ). '' Any attempt to contact Schwab for further clarification has the assisting Schwab representative require that I contact the their International Services Department due to the notes left on the account by the processor who initiated the account closure. Contacting the International Services Department yields a similar frivolous result, as the end result is, without fail, the representative insisting that I open up their " Schwab One International Account '', in spite of my US address. I suspect this is also due to the notes made by the same processor who initiated the account closure. Prior to the account closure, I have been able to use my Schwab checking account without issue. Those with checking accounts with other financial institutions based in Guam were able to deposit my checks without issue. The only exception was when I signed up my father for the same checking account with me as a joint owner. Only then did I receive notice that both of our accounts would be closed, even after receiving all the official documents, check books, and debit cards. 

Involuntarily closing a consumer checking account is a punitive step for any financial institution. This typically requires a detailed explanation to provide clarity why such drastic steps were necessary, often in writing, to comply with federal financial regulations. Yet on XX/XX/XXXX, I received a letter in the mail simply stating, " We're writing to let you know that, as you requested, we've closed the account listed above. '' No such request was made. 

Despite numerous correspondence yielding minimal information, I received an online message ( # XXXX XXXX stating, " I was able to reach a processor and get some clarification on account ownership in Guam. Apparently a year or two ago, Guam 's registration requirements for bank products was updated from domestic to international. This wasn't noticed until the recent account updated you requested. '' While this statement appears highly anecdotal, it did represent the speculative nature of the closure, since I and most agents had no concrete information on why the closure occurred. The phrase " a year to two ago '' leads me to believe that even the processor is unsure. 

After some digging, I found that the 'Schwab OneTrust Account Application for Trusts Domiciled in the United States ' form [ XXXX ( XX/XX/XXXX ) ] contained the language " To open a Schwab Bank High Yield Investor Checking Account, all Trustees must be U.S. citizens or U.S. resident aliens and reside in the U.S. or one of its territories ( except Guam ), or have a U.S. military address. '' But an updated version of the same form [ XXXX ( XX/XX/XXXX ) ] now has the language, " Use this application to establish a Schwab  Bank High Yield Investor Checking ( High Yield Investor Checking ) Trust account with Charles Schwab Bank, SSB ( Schwab Bank ) and link it to your existing Schwab One Trust account ( Trust brokerage account ) held at Charles Schwab & Co. , Inc. ( Schwab ). All Trustees must be U.S. citizens or resident aliens, and must also reside in the U.S. or one of its territories and provide a U.S. mailing address. " So I am now even more confused why a form which had a Guam exclusionary statement, then had that same statement removed to include all U.S. territories three years later, despite all the facts surrounding my account closure. Perhaps there is statutory regulation as it pertains to Guam regarding the Schwab high-yield checking, and if indeed there is, I will concede. But Schwab has not been communicative nor transparent during this entire process to provide any clarity. 

Whoever is/are the person/people in charge of these closures need to a better job presenting why such closure is necessary instead of closing an account with little to no communication. This account closure could be arbitrary or it could be justified, but at this point I have little information to go on other than to speculate. 

Happy Holidays and Happy XXXX XXXX Concerned Client

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation