Back in the late 90's I had a very small business. Small, as in, I never did anything with it, and I don't think it ever made more than a few hundred bucks over the course of its existence. Somewhere late in the year 2000, I decided that I wasn't going to do anything more with the business, and talked to my spouse about shutting it down. We were both directors, and we both had signing authority, but I was the only one who was involved - my spouse was on there in name only (in case anything ever happened to me).
At the same time I decided to shut the business down, the bank I dealt with offered me overdraft protection on my business account, to the tune of $15,000. I thought this was a bit crazy, since the business itself had one employee (me), no assets, no receivables, no bills, no anything, really. And, it had only ever had a few hundred dollars in the account at the most.
So, I declined the offer. I took the documents I'd been given (they wanted me to sign them and get them notarized to put the overdraft into place) and I shredded them. No biggie.
I shut the business down in early 2002. I did the final accounting, and had the government dissolve the corporation. I also had to have surgery at the time, and didn't get a chance to close the business bank account (I couldn't drive, and was unable to make it in). I called the bank, and asked my rep if it was possible to close the account over the phone. She told me no, but she also told me that if the balance in the account reached zero, and if the account wasn't active for a number of months, it would close automatically.
So, I let it go. I stopped receiving bank statements in 2003, and the last statement I remember receiving stated that I had about eighteen bucks in there.
- I had a business account.
- I was offered overdraft protection, and declined, shredding the documents.
- I closed my business.
- I let the bank account close itself, as per my banking rep's advice.
- I forgot about the business, and got on with my life.
Last month, I got a call from a collection agency, stating that I owed this bank $4,100, and that if I didn't pay up immediately, the debt would be registered on my credit bureau report as an unpaid collection. After I recovered from my initial shock, I did a bit of investigating.
What really happened:
Just after I told my banking rep I was closing the business, she got my spouse to sign the overdraft agreement. He had gone into the branch to purchase RRSPs, and he literally had no idea what he had signed. The overdraft agreement doesn't even have our business name on it, strangely enough. It just says 'Business Line of Credit'. The bank rep did not inform me that the overdraft was in place, and I was never sent a copy of the agreement.
In 2003, just after I stopped receiving bank statements, the bank let the account fall into overdraft. Since there was an overdraft agreement in place (which I knew nothing about), they kept charging me the account fee (what it costs just to have the account), the overdraft 'plan fee' (what it costs just to have overdraft protection), and overdraft interest (which increased each month as the balance grew, obviously).
When I went into the branch, they gave me a 31-page account printout, showing that I owed them $4,132.61 in SERVICE CHARGES. Not one penny of that money was ever spent by me or the business. It's all account fees and interest.
They let the account accrue four grand in service charges over six years, and couldn't be arsed to actually let me know until now. And, did the bank itself try to contact me? No, they just sent it to a collection agency, and that was the first phone call I got.
I stopped receiving statements in 2003, and I did not receive any phone calls from them. They told me that they'd sent 'some mail' but it had been returned. I've lived at the same address and have had the same phone number for 12 years. They can't say they couldn't find me. I also demanded a copy of the record of phone calls they made to me (since they're required by law to keep records) and they said there were 'no calls on record'.
How's that for shitty customer service?? They silently let service charges accrue for six years, and blindside me, telling me to pay up right fucking now. I'm pretty sure any other bank would have contacted me after six months of inactivity if service charges were accruing, right?
I actually paid the debt. I was told by several people that I'm crazy for doing so, but my credit rating is immaculate, and the bank could literally screw me for seven years by putting an 'unpaid collection' on my credit bureau report. I worked for a bank years ago - I know that any derogatory items on a bureau are grounds for credit refusal, even if the customer isn't the one at fault. It's a case of 'guilty until proven innocent'.
But, ironically, I pulled up a copy of my bureau today, and the overdraft is showing on there - they reported in 2006 that there was NO outstanding balance, and NO late payments!
So, I'm sick to my stomach, I'm livid, I feel violated, and I'm at a complete loss. I'm waiting to hear back from a lawyer, since I'm going to try to recover the money. If anyone has any suggestions, I'd be glad to hear them. Is it even legal for a bank to do this??