ENCINITAS — A plant and pottery shop in Leucadia recently had its U.S. Bank account closed for unknown reasons, forcing the small business to miss payroll and bill payments.
Since opening in 1985, The Madd Potter, a local pottery retailer and nursery, was a customer of Union Bank. In late September 2021, Minneapolis-based U.S. Bancorp, the parent company of U.S. Bank, bought Japanese financial group MUFG’s Union Bank for $8 billion.
But the multi-billion dollar acquisition wasn’t a smooth transition for some of Union Bank’s longtime customers, including the beloved Encinitas plant shop on Coast Highway 101.
“We had to get new account and routing numbers, new deposit slips, new credit cards… it was all very sticky,” said Elly Sword, bookkeeper at The Madd Potter.
Two months after making all the necessary changes for the merge, the shop received a startling letter indicating that the bank had closed its account.
“Out of the blue, we received a letter from U.S. Bank which stated that they have elected to close all of our accounts,” Sword said. “No explanation at all.”
The letter, dated July 24 and mailed to the Madd Potter’s post office box, explained the bank had “elected to close your deposit accounts” in 10 business days and was mailing a check for the shop’s remaining balances on Aug. 7.
“Please be aware that when your account is closed, you will no longer be able to conduct any banking business using these accounts, including making deposits or initiating wire transfers,” the letter reads. “Any/all outstanding checks presented against the account will be returned as unpaid.”
The shop contacted its local U.S. Bank branch in Rancho Santa Fe to figure out what was going on, but the representatives there didn’t even know the shop’s account had been closed.
“We were stunned,” Sword said. “We’ve never had a check bounce, no overdrafts, and 90% of our sales are credit cards.”
Since the bank mailed a check for the remaining balance in Madd Potter’s account, the small business had no money for payroll and was unable to pay its 11 employees on time. Additionally, the store’s various bill autopayments bounced, including its COVID-19 loan payment and health insurance.
The Madd Potter’s sister store in Fallbrook, located within the company’s Emerald M Growers nursery, was also affected by the account closure.
Seeking answers, Sword posted about what happened on Nextdoor and received several responses indicating that others were also feeling burned throughout the bank merging process.
“I had a horrible time through the transition, too,” said Ellie Pope on Nextdoor. “They decided I wasn’t the owner of my business (it’s a solo business – really, who else could own it), then split my business across three different accounts, I couldn’t download transactions into my software, and even their own records were many days behind so I had to track every transaction manually.”
Martin Banks has also had a rough transition with the bank.
“They put my corporate (credit card) in my personnel (sic) account, and all I can do is close it to have the (credit card) removed,” Banks wrote on Nextdoor. “I’m also not listed on my business account as the business owner. I called support, and they said they would change it. I’m still waiting… I am considering leaving a bank I’ve been with for over 20 years.”
Sword is angry about what happened and wants answers from the bank.
“This is so outrageous that this can happen — a bank shouldn’t be able to do this,” Sword said. “I’ve been an accountant for 35 years, and I’ve never seen something so egregious.”
After a week, The Madd Potter finally received its account funds on Aug. 16.
U.S. Bank provided a statement to The Coast News regarding The Madd Potter’s account closure:
“The Bank has internal policies it adheres to in these circumstances, and while we are unable to provide additional comment regarding client accounts, the actions taken were done in accordance with those policies,” the statement reads. “We value the relationships we have with our clients and understand that a change in account status, including account closure, may create an inconvenience. When appropriate, we provide a grace period between notification and the effective date of the account action.”
News outlets have reported an uptick in account closures from various banks across the nation over the last few months, suggesting the reason behind random closures is likely due to an increase in fraudulent activity.
Sword filed a complaint against U.S. Bank with the Consumer Financial Protection Bureau on behalf of the business.
“I’m hoping they can get U.S. Bank to provide a real answer,” Sword said.
