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I hadn't been paying attention to my checking account (in which I kept a minimum balance of $1500 just to avoid a monthly "maintenance fee") for about a year. But, yesterday I logged in and found that it had incurred a $5 "dormant fee" in each of the last 4 months. I newly learned that a checking account becomes "dormant" after 11 months without activity. This bank is in Washington state in USA.

I could have avoided the fees simply by moving $5 from my checking account into my savings account.

It frustrates me that they never even sent an email to me (before or after any of the fees).

Is this really legal in USA?

In court, I would argue that the bank actually benefits from my inactivity. Accounting is easier and, for a given total balance, they would actually prefer to have inactive customers for more stable loaning. They simply did not provide anything, or incur any extra difficulty, to justify a fee.

It is clear that they are taking advantage of fine print that no one ever reads, about a fee that the customer does not naturally expect. I consider this to be morally wrong, but wondering here if a class action lawsuit is likely to win or lose.

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    If you're sufficiently bothered, you're almost certainly better off submitting a complaint to the CFPB consumerfinance.gov/complaint if contacting the bank doesn't satisfy you. That's vastly less work than a lawsuit and banks have every incentive to make their regulator happy. – Justin Cave Jan 27 at 20:44
  • Ok, I submitted a complaint to CFPB, thanks. – bobuhito Jan 28 at 3:26
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    "fine print that no one ever reads" - fine print that a prudent, sensible person always reads. – Michael Harvey Jan 28 at 9:37
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    since the base rate in the US is currently almost zero (0.13%) a dormant bank account will be a net negative for many banks (because of cost for sending out monthly statements, customer support, etc.). So it could be hard to argue that the fee is unwarranted. - Many banks currently make a big portion of their earnings with transfer fees and similar, so they mostly earn money from active accounts. So the fee is not without a logical basis. – Falco Jan 28 at 12:02
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    @bobuhito "banks can't just write anything there." - no, but they can print anything that their lawyers have checked is legal. – Michael Harvey Jan 28 at 17:47
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The legal aspect is better suited for https://law.stackexchange.com, but It's probably "legal" because you signed an agreement when you opened the account that detailed the charge. They aren't "damages" that you can argue aren't appropriate, so they don't have to justify it.

However, you might get them to refund the fees if you threaten to move your money elsewhere. They may rather refund part of all of those fees to keep you as a customer. Or, they may not, if you aren't a big enough fish to worry about. In that case, you have a choice: stay with them and know that you have to keep a minimum balance (or rearrange your balances) or move to one of the dozens of "free" banks that exist without these types of fees (or at least fees that don't apply to you).

A lawsuit is going to cost you way more than the $20 you're out in fees.

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  • I did ask to refund the fees and they refused. I was thinking a class-action lawsuit might go pro-bono (maybe this isn't the right term, so let me say that the lawyers get paid by the bank as part of the penalty only in case we win), so I really don't have to pay anything but my time (and I even think my time could be compensated as part of legal fees, and even if not, it would be a good learning experience and a matter of principle). – bobuhito Jan 28 at 3:02

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