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Citibank Closes Website's Bank Account Over Content!

Your Site Could Cause Your Account To Be Closed!

     
6:47 pm on Feb 26, 2010 (gmt 0)

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It's bad enough that we have to worry about credit card fraud and other swindles causing problems with our business bank accounts but now we have to worry about the content of our websites and banking censors as well.

Did you know your bank could close your account over "objectionable content" on your website?

That's just what they did to Fabulis and now deny it:

repeated conversations with Citibank staff in which he says they told him about a review process that found the content of his site was not in compliance with the bank’s policies.

[blogs.wsj.com...]

Since when is it the banks business what the content is on your website as long as it's legal?

This is a VC funded site backed by Silicon Valley venture capital and The Washington Post, an obviously legitimate business.

Not only that, but they refused to open an account for a novelty underwear company!

Two days later he received a call from the branch manager, who explained that Citibank couldn’t open the account. The nature of the business could be embarrassing to the bank, the manager explained.

[blogs.wsj.com...]

What might you post on your site that could have your bank close your account?

What business might you launch that they'll refuse to open an account for?

Maybe they should just change their name to CensorBank so we know upfront what to expect.
7:04 pm on Feb 26, 2010 (gmt 0)

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What might you post on your site that could have your bank close your account?

A blog criticizing CitiBank? :)
7:10 pm on Feb 26, 2010 (gmt 0)

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I wonder how long before they start checking people's facebook and tweets.

"Sorry your account has been closed for complaining about long wait times in our lines in your FB status"
4:20 pm on Feb 27, 2010 (gmt 0)

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When I worked as a very junior bank clerk having to open an account for a lady of "negotiable affection".
7:17 pm on Mar 1, 2010 (gmt 0)

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Looks like the tweets sort of helped? Maybe there really is something happening in the twitterverse.
7:52 pm on Mar 1, 2010 (gmt 0)

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kinda funny a 1 page underwear site can make front page news.
8:07 pm on Mar 1, 2010 (gmt 0)

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I consider a bank a business partner. I respect the fact that a bank has the right to choose who it does business with, particularly when it comes to housing money that may come from gambling sites, x-rated, etc.

Just like we have the right to not show ads from certain industries we don't like, or want to deal with.
8:30 pm on Mar 1, 2010 (gmt 0)

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kinda funny a 1 page underwear site can make front page news.


That was just another example of CensorBank's policies, but Fabulis, the VC-backed site is the big story.

Hundreds of thousands in cash in the bank suddenly closed, no access, because of some content of their site.

No interaction, no "could you tone it down?", nada.

Out of business. Account closed.

I respect the fact that a bank has the right to choose who it does business with, particularly when it comes to housing money that may come from gambling sites, x-rated, etc.


That's fine, but these were both legal, although slightly off the mainstream sites.

The point was the bank slammed the door on Fabulis' account and left them unable to pay bills, employees, etc.

That seems a little extreme IMO, to cut someone's business from their finances without so much of a warning, because someone wearing horn-rimmed glasses at the bank got his sensibilities tweaked while visiting an alternative lifestyles website that the bank had previously approved.

Letting the bank decide who to partner with, fine, they already decided when they opened the account with deep pockets behind it, greed was the motivation.

However, cutting someone off from their funds, for a completely legal business without notice or time to relocate their accounts, that's way over the top.

Could you imagine it happens to you?

Perhaps the bank manager doesn't like your politics on your blog, POOF! your ATM doesn't work.

You post a complaint about the interest rate hike on your credit card in Facebook and POOF! your CC doesn't work.

Maybe the bank just doesn't like doing business with Goths today, what tomorrow?

It's a scary proposition that they're wielding this kind of financial leverage over freedom of speech.

[edited by: incrediBILL at 8:35 pm (utc) on Mar 1, 2010]

8:34 pm on Mar 1, 2010 (gmt 0)

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If you read the find print of many credit card companies TOS many specifically mention that it is unallowable to make charges related to the promotion of any businesses such as a company web site, purchase of business equipment, or subscription services such as paying for web hosting. Now we all know it goes on without being penalized but banks do have their "out" in the legalese.

When I inquired further with the mentioned bank employees readily stated why and elaborated on things that were not allowable that the TOS only mentioned as business services. The distinct difference between business and personal cards was also pointed out. They stated they had found far too many were underwriting risky and ongoing business ventures that eventually cost the banks substantial amounts of money. I imagine this is particularly true during a recession.
8:37 pm on Mar 1, 2010 (gmt 0)

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They stated they had found far too many were underwriting risky and ongoing business ventures that eventually cost the banks substantial amounts of money.


We're not talking about risky financing here, we're talking about a company being cut off from their funds, checking and savings accounts, because of web content which was pretty tame.

Imagine you wake up and none of your accounts work.

How would you do business?

I think as webmasters it's important to know which banks are pulling these shenanigans so we can avoid them.

Reward the banks with your business that are simply willing to take our money without critiquing our content as part of bargain of keeping those accounts open.

[edited by: incrediBILL at 8:41 pm (utc) on Mar 1, 2010]

8:40 pm on Mar 1, 2010 (gmt 0)

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Actually after reading the post it was "said" due to not completed paper work the account was blocked, not ever closed. After the forms were completed he was allowed access to the account. But it sure didn't start out that way. Banks govt all have a way to squirm their way outta a jam.
8:49 pm on Mar 1, 2010 (gmt 0)

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Could you imagine it happens to you?


Eggs in one basket.....
8:49 pm on Mar 1, 2010 (gmt 0)

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Actually after reading the post it was "said" due to not completed paper work the account was blocked, not ever closed.


Not according to the CEO on the Fabulis blog:

On Friday evening we finally learned what actually happened! It turns out that a compliance officer at Citibank did a review of the fabulis website and blog and marked it as #*$!


[blog.fabulis.com...]

Per citibanks message post:

Banks are required by law to conduct due diligence and understand the nature of business accounts. For Internet business accounts, we have made it clearer to our bankers what the due diligence process entails. For example, we will continue to reserve the right to decline or suspend an account if we find illegal or discriminatory content, or if the site involves gambling or #*$!ography. Beyond that specific due diligence, however, we do not monitor or evaluate our customers' web content.


[banking.citibank.com...]

OK, so the guy selling novelty socks was selling #*$!?

I hear them talking but I'm not buying it.
9:12 pm on Mar 1, 2010 (gmt 0)

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First of all I was alerting people to the particular TOS of the mentioned. Currently this bank is leading the charge for the return of annual fees.

Secondly, I was just pointing out there is a lot of fine print so keep it in mind. Always have leverage and make sure you can jump ship.

Thirdly I don’t profess to know the intimate financials or solvency of any company. That many times is disguised until they yell bankruptcy.

Fourthly I think any bank that would attempt to suspend the activities of any site except a #*$!, hate, site etc. knows it could be dealing with a first amendment suit. In other words I would prefer to see all the facts roll in before I made that judgment.
10:05 pm on Mar 1, 2010 (gmt 0)

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This right her is one of the reasons we should not let banks get too big. A perfect example.
2:10 am on Mar 2, 2010 (gmt 0)

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I consider a bank a business partner. I respect the fact that a bank has the right to choose who it does business with, particularly when it comes to housing money that may come from gambling sites, x-rated, etc.


Not so fast, they are laws that regulate these things, Citi isn't the local barber shop. But even then, Citi should be ready to deal with the publicity and payback over its actions. You cannot have it both ways
4:29 am on Mar 2, 2010 (gmt 0)

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scares the crap out of me.
7:29 am on Mar 2, 2010 (gmt 0)

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These the guys that took multi-billion dollar bailout, then ran out and bought a new $50 million jet?

Maybe they could make decisions based on financial reasons?`
9:22 am on Mar 2, 2010 (gmt 0)

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Banks are required by law to conduct due diligence and understand the nature of business accounts.


Classic case of a bank employee overstepping his authority.

Knowing a local bank manager extremely well I can say that this statement is an EXTREMELY generalized wording for the type of due diligence actually required. The bank is liable if it is aiding illegal activity, that's it. A website can be verified to be legal by simply asking where it is hosted since most hosts have tougher content guidelines than any bank ever could. Even if the owner lies and provides a false host name the bank is clear and the owner is in legal trouble for having lied (assuming a police investigation is even started).

Things the bank doesn't need to, and probably shouldn't, know include: domain name, affiliate companies on site, related social media accounts etc. Just because you own an internet based business does not mean you wave your right to privacy.

Thankfully people are free to close accounts with a bank and choose another. I wonder if this bank is accepting the paycheck of any of the employees who manufacture/sell these "objectionable" items/content.
11:10 am on Mar 2, 2010 (gmt 0)

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The correct procedure for the bank to follow in this case would be...
  1. Refer it to their legal dept.
  2. Do nothing because it is legal
    or Freeze the account and inform the police because it is illegal
    or Give the company 30 days to make alternative arrangements, i.e. open an account with another bank.
Clearly, the bank was bang out of order in this case. I would have gone straight to court to for an injunction ordering the bank to reverse its decision and then I'd demand reimbursement of expenses and compensation for loss of business, damage to reputation, stress and time wasting.

Kaled.
11:56 am on Mar 2, 2010 (gmt 0)

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For my own UK software company, I have a bank account with the co-operative bank. They trade on being an ethical bank. To open an account with them, you actually sign a declaration that your company does not deal in weapons, alcohol, tobacco or various products or services they class as unethical.

They are very explicit, not just in the small print, that if your company breaks their ethical code, they will freeze then terminate your account.
12:00 pm on Mar 2, 2010 (gmt 0)

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@kaled: In the past, I managed to get a court order to freeze the bank accounts of a company that owed mine a significant amount of money.

It was amazing how fast the company found money to pay enough of the outstanding bill to get the courts to lift their order.
2:05 pm on Mar 2, 2010 (gmt 0)

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So the co-operative bank is "ethical" but presumably frowns on the "unethical" co-operative retail stores who all sell tobacco products. Does this mean they can't use their own bank?
2:57 pm on Mar 2, 2010 (gmt 0)

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you actually sign a declaration that your company does not deal in weapons, alcohol, tobacco or various products or services they class as unethical.


So technically, if your website posted a news piece about weapons, alcohol or tobacco they could freeze your account.

We're not talking selling those things, we're talking simply words, discussion, news reporting, because by the letter of that agreement you're now "dealing" with those unethical topics.

So in theory this means banks could close news sites for articles on unethical topics?

You see where I'm going here, banks could have a very heavy influence on the freedom of the speech and press very soon.

People will think twice before posting anything on the fringe, "could this terminate my bank account!"

I was hoping CitiBank was just a fluke, but it sounds like it's just the tip of a much larger iceberg that hasn't been seen in action yet.

I can see institutions with such draconian rules using monitoring services to look for keywords that flag violations on customer sites, it's probably already happening.
3:04 pm on Mar 2, 2010 (gmt 0)

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This has been a problem for firearms dealers in the USA. Certain banks have unilaterally stopped processing transactions for anything involving firearms despite the business being licensed by the state and federal government.

The NSSF reports that Citicorp’s Merchant Services Division is refusing to process gun-related customer credit-card sales.
3:24 pm on Mar 2, 2010 (gmt 0)

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The NSSF reports that Citicorp�s Merchant Services Division is refusing to process gun-related customer credit-card sales


That sounds like a PR move, if someone shoots somebody and paid for it with their credit card there might be bad publicity involved. In reality paying by credit card helps police by creating a paper trail that cash payments do not.
4:24 pm on Mar 2, 2010 (gmt 0)

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That sounds like a PR move, if someone shoots somebody and paid for it with their credit card there might be bad publicity involved.


I'd be inclined to think the bank would be more afraid the shooter won't be able to pay their credit card bills from jail.
4:50 pm on Mar 2, 2010 (gmt 0)

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@incrediBILL: You've made me think - maybe I need to check the precise wording...
4:57 pm on Mar 2, 2010 (gmt 0)

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Maybe they should just change their name to CensorBank so we know upfront what to expect.

funny, in germany citibank have just this february changed their name to "targobank".
6:14 pm on Mar 2, 2010 (gmt 0)

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I consider a bank a business partner. I respect the fact that a bank has the right to choose who it does business with, particularly when it comes to housing money that may come from gambling sites, x-rated, etc


I have to disagree with you here. A bank is NOT a partner, they are a vendor selling you services, plain and simple. Would you consider the guy who sells you coffee a partner? The guy who services your photocopier? As long as the business is a legal business to deny credit based on the fact that they don't like the content on the websites is ridiculous.

US banks haven't exactly been paragons of morality of late, taking huge amounts of taxpayer cash and still paying execs huge bonuses. Banks need to clean up their own glass houses before they go throwing stones. (Yeah...I know I'm mixing my metaphors)
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