I deposited several checks/money orders that were fraudulent or did not clear. The bank took the money from my checking account and then froze and/or closed my account. Can it do this?
Yes. Depending on the circumstances, you may be held responsible for the entire amount of the fraudulent check or money order that you cash at the bank or deposit into your account. Generally, banks may close accounts, as explained in your deposit account agreement, which may include closing your account without notice for reasons including inactivity or low usage.
Also, the bank may freeze transactions in the process of closing your account. If your bank gave you credit for a check or money order that is found to be fraudulent, the bank can reverse the funds from your account. As the payee of the fraudulent item, you must pursue the maker if you wish to seek restitution.
Your bank's rules concerning these issues are provided in the deposit account agreement given to you at the time the account was opened. Review your deposit account agreement for policies specific to your bank and your account.
Last Reviewed: October 2020
Please note: The terms "bank" and "banks" used in these answers generally refer to national banks, federal savings associations, and federal branches or agencies of foreign banking organizations that are regulated by the Office of the Comptroller of the Currency (OCC). Find out if the OCC regulates your bank. Information provided on HelpWithMyBank.gov should not be construed as legal advice or a legal opinion of the OCC.