Bank's Online Computer Problem Puts Customers Offline

Our client opened a checking account with a recognized national bank in its Woburn, Massachusetts branch in 1995. The checking account was eventually converted to a joint checking account when she got married. For many years, our client utilized online banking services offered by the bank to pay almost all of her recurring monthly bills. Prior to June of 2012, our client did not experience any significant problems with the online payment process and she did not have any history of late payments.

One of the many bills that the client paid online was a mortgage payment to Bank of America. In June of 2012, Bank of America received an erroneous electronic message from the client's bank which concerning the client's checking account. The message stated "account frozen." In fact, the checking account was not frozen. As a result of this erroneous message, the mortgage payment to Bank of America was not made. Our client was unaware of the nonpayment. When our client logged onto the account, the following information appeared:

The funds for your payment to BAC Home Loans Servicing, LP were withdrawn from your account on 06/26/2012. BAC Home Loans Servicing, LP received your payment electronically on 06/27/2012.

If you have a question about your bill or about crediting the payment to your biller account, please contact BAC Home Loans Servicing, LP directly.

The status is paid.

Unfortunately, the mortgage non-payment was the first of many bills that would, through no fault of our client, go unpaid. The problem persisted for many months. When our client learned of the serious error, she spoke with bank representatives who repeatedly assured her that the problem had been or would be corrected.

As a direct result of the inaccurate reporting by the bank and delayed action to correct it, our client's financial status plummeted. Our client incurred significant late fees and penalties, she and her spouse had no access to credit, they were denied the opportunity to capitalize on historically low interest rates and, further, they were unable to restructure their mortgage and home equity loan. Our client's credit score dropped dramatically from an excellent rating in the mid 700's, down to a poor rating in the 400's.

At Fraser Law, we filed a lawsuit against the bank. Putting a dollar value on the negative impact of the client's credit score presented a challenge. After we conducted considerable discovery, we resolved the case very favorably through mediation.