Consumer complaint received 2017-09-26
Company: PEOPLE'S UNITED BANK, NATIONAL ASSOCIATION
State: NY
Product: Checking or savings account
Sub-product: Checking account
Issue: Managing an account
Sub-issue: Deposits and withdrawals

Complaint:
See the following two emails. They explain what happened. I am a bank regulatory attorney and this defies anything i have experienced. We moved money from our XXXX account to another account in Peoples United Bank. Both are in NY ( XXXX XXXX ). The check used posted monday. XXXX refuses to release the funds until XXXX XXXX. XXXX has written them a letter telling them that there is no risk and all things are normal. XXXX refuses. The " suspended funds '' are needed now to pay a mortgage. XXXX can not stop the check because it posted. Peoples will not clear the check in accordance with Reg CC. 

-- A email to our XXXX Representative sent today : " XXXX, for whatever reason, the operations group in XXXX, CT, where their head office is located, simply refuses to release the funds. They give no articulable reason and showing them reality has no effect. Literally, you could hand them a red ball, and they would call it blue! This happened a few years ago when I, the local officer were on a conference call with someone in XXXX. That person did not know that I was able to see the same screen that she was using. The question arose as to when a particular deposit cleared. The local officer and I asked whether and when the particular deposit cleared. The XXXX person gave us an answer. The answer was clearly wrong. The local officer, again, asked the XXXX person to double check her facts. Again, she lied. At that point, the local officer was red with embarrassment and I simply told both and it made no sense to continue this conversation because we were not negotiating on the same level. 

To this day, I am not sure why she lied but we keep the account open for very narrow purposes and try to never put ourselves in a position with Peoples that requires an ethical or regulatory-based compliant decision. Obviously, we all know what happens when banks make mistakes and I spend 30 % of my time defending my client banks against angry customers and unhappy regulators. Without getting too deep, there has been a perceived decline in the industry over the past 20 years and there are many reasons for this. 

However, Peoples takes this perception problem to a level that even I could not defend. ( a ) if XXXX pays the check, Peoples is not permitted to inquire as to whether XXXX paid the check on an overdraft exception basis or for any other reason as long as the funds are properly transferred ; they either clear it under the Reg CC time periods, or not. XXXX b ) If peoples suspects some foul play, they XXXX hold the check but need to explain why. 

XXXX is doing neither. Even in the face of your letter, etc, they refuse to release money that does not belong to them. 

The answer is to put a stop in the check. Even after the check has been posted, you are allowed to do this for various reasons. While unusual, a justifiable reason would be that the depositor bank simply refused to accept the posted nature of the check and release the funds. Once you put a stop order, Peoples will have no decision left and the issue will disappear. Frankly, we can not wait and talk any more. I need to get bills paid and the funds must become available again. What is making it harder is that our bank in XXXX XXXX is struggling to get its operations functional again. We do not need this now! '' -- XXXX could not put a stop order on a check which has already cleared and posted, absent fraud. Thus, only answer i can come up with to free the suspended funds at this point is contained in the following email sent to Peoples an hour ago : " Topic : Other XXXX XXXX XXXX From : XXXX XXXX XXXX XXXX XXXX XXXX XXXX Account XXXX Evening XXXX Daytime XXXX Message : We are having problems with this account. A deposit of {$2500.00} is being held after being posted by the payor bank. The payor bank has called Peoples and informed them that the funds are cleared and there is no risk. Nevertheless, Peoples wants to keep a hold on the funds until XXXX/XXXX/XXXX. This is unacceptable. I am a bank regulatory attorney and this is a new one for the books. We need the funds returned to our XXXX account or cleared tonight. The hold is placing us in a dangerous position. 

As a quick solution, i had my associate research. She recommends the account be closed. This will force the suspended funds to be returned to the payor bank. A check for the balance in the account XXXX {$2200.00} XXXX can be prepared and ready for pick up at the XXXX branch tomorrow. XXXX clear the deposit or close the account by end of business today and return the " suspended '' funds and prepare a bank check for the balance. 

We are out of options. '' -- There is something inexplicable with this bank and we try to use it as a convenience. But, this time, things are out of control.

Company response to consumer: Closed with explanation