Simple bank discriminates against permanent US residents
In an effort to attract new money and customers, Portland based bank Simple introduced a new product, called “Savings Goal” which offers 2.02% APY, which puts them in the lead in terms of high yield saving.
Upon applying for this new product, Simple asks for a couple of questions like occupation, source of income, whether you are a PEP (politically exposed person) etc. One of these questions is:
Are you a US Citizen?
Upon submitting the short questionnaire, the following message appears:
Sorry, we cannot offer you a Protected Goals Account
I first thought this was a UX mistake, a wrongly phrased question, but it seems, according their Twitter support channel, Simple does actively discriminate against lawful permanent US residents, which is very odd. In the ten years I’ve been living in USA I never experienced any US bank discriminating against permanent residents.
Permanent residents — aka “green card holders” — pretty much enjoy the same privileges as US Citizens. Permanent residents have a social security number, tax ID number, driver’s license, credits score etc. They are lawfully eligible to live and work in USA, buy property, loan money, start a business, pay taxes etc. The only few things permanent residents can’t do is vote and take on a government job, but that (should be) about it.
Simple creates a dangerous precedent
By denying a product to lawful permanent US residents, Simple creates a dangerous precedent. Both Bank of America and Wells Fargo have been under scrutiny for freezing accounts or denying loans and credit cards to non-US citizens. But what makes the Simple case odd, is the fact that Simple offers a savings product, not a loan, credit card or anything related to borrowing money.
It’s not the first time Simple puts itself in this situation. When they transitioned from Bancorp to BBVA Compass several non-US citizens experienced issues when converting their accounts. More than a year later, they clearly haven’t learned anything from the past.
Is Simple still the bank customers originally believed in?
Are things going south in terms of customer experience since BBVA Compass acquired Simple and the original CEO, Joshua Reich left? Simple always touted to be a new kind of modern banking, but I am not sure denying lawful residents can be considered modern. It’s conservative at least.
Update 1. Wed Sept 26th, 2018 5pm
Someone working at Simple responded to this article in a Reddit thread. (Update: Note that this is not an official response from Simple, but a personal opinion.)
“It’s a hard thing to do, because of the legal morass that US citizens have voted for (indirectly) which purports to thwart financing for terrorist groups and sanctioned individuals.
I’m not saying that’s a good excuse, because it isn’t. We simply have not gone through the product development process to offer our service to permanent residents. It’s not because of an anti-immigration stance or anything like that, as I can assure you our team is conscientious about diversity and inclusiveness.”
The problem with that statement is that on the basis that a lawful US resident could be a terrorist, all lawful US resident are excluded from obtaining their product (basically, we are treated like terrorists). That does sound pretty extreme, over-zealous and completely unfair. While I think there is a case to be made against certain nationalities that fall under OFAC regulations, it’s by no means a reason to exclude ALL lawful permanent US residents.
Lastly, when signing up for a regular account at Simple, there is already a verification process in place. But yet, existing customers who have been banking with Simple for several years suddenly get hit with a permanent residency exclusion. Explain me how Simple is avoiding doing business with potential terrorists by allowing them a regular account, but by excluding them from setting up a Savings Goal? It doesn’t make any sense.
What Simple is — unintentionally — doing, is building a wall between US Citizens and lawful permanent US residents.
Update 2. Fri Sept 28th, 2018 2pm
I received an official reply from Simple:
Thanks for reaching out to us! In May of 2016, the US Department of the Treasury issued new rules and guidelines under the Bank Secrecy Act in order to clarify and strengthen requirements for ALL financial institutions. In short, the Federal Regulators require us to ask more questions of our customers and know more about them and how they will be using the account. These new rules and guidelines had to be implemented by May of 2018. With that said, we can only offer new accounts to U.S. citizens. We’re not yet set up to offer accounts to non-citizens, including permanent residents.
We understand this may frustrate current customers attempting to open new, or shared accounts. If you’d like, we’d be happy to follow up with you once we are able to offer accounts to permanent residents. Please let me know if you would like to be added to that contact list.
Isn’t it odd that ONLY Simple bank discriminates, but US banks like Marcus, Ally etc. all welcome lawful permanent US residents? Following the thinking of Simple bank, ALL other US banks are non-compliant with the Bank Secrecy Act.
Additionally, there is very little difference between a US citizen and US permanent resident (both “US persons”), so the excuse that they “are not set up to offer accounts to non-citizens” is absolute bullshit. The way Simple verifies a US citizen is exactly the same as how one would verify a permanent US resident, by requesting the following pieces of information:
- social security number (SSN)
- tax identification number (ITIN)
- driver’s license
- proof of residency (electricity bill, phone bill,…)
You can also turn around Simple’s thinking: How would Simple proof someone is not a US citizen? Will they ask a US citizen for their passport? I don’t think so, as most Americans don’t even have a passport… So Simple doesn’t even have a way of verifying whether a client is a US citizen.
Next step, take legal action?
There is only one option left and that is to take legal action against Simple. The issue here is not regarding the specific account they offer (lots of other banks offer comparable rates), but about the simple fact they treat lawful permanent US residents different from US citizens.
If you follow Simple’s thinking, US banks and lenders could ban lawful permanent US residents from opening accounts, getting credit cards, getting a mortgage, starting an education,… preventing people from doing business, buy a property etc. It’s a dangerous precedent that in light of the current political turmoil in US can simply not be accepted.
Simple’s reference to the Bank Secrecy Act’s new rules since May 2016 doesn’t hold any merit either as it doesn’t state anything about treating permanent US residents differently. The rules talk about building up a risk profile, but I don’t see how a lawful permanent US residents would indicate a higher risk. Like already said before, if the resident would be part of a rogue state (Iran, North Korea, Sudan, Syria), there is a case to be made. But excluding all permanent residents is pretty extreme and unfair.
What’s the legal base to take action?
A “US person” — which includes “permanent resident” — is protected by all laws of the United States, the state of residence and local jurisdictions. This prohibits discrimination based on a person’s national origin, race, color, religion, disability, gender, etc.
What are other banks requiring?
Marcus (by Goldman Sachs), Ally.com are just a few other banks offering a similar high yielding savings accounts. Looking at their requirements it’s clear they all clearly state that lawful permanent US residents are allowed to open an account:
What Ally says:
If I’m not a U.S. citizen, can I still open an account?
To open an account with Ally Bank or Ally Invest: You have to be a citizen or a legal permanent resident of the United States. You must be at least 18 years old. You must have a Social Security number to open an Ally Invest account. For bank accounts, you can use your Social Security number or your Taxpayer Identification number. You need a U.S. street address.
What Marcus says:
Who may open and maintain an account:
Anyone who is a citizen or a legal permanent resident of the United States of America (“U.S.”), is at least 18 years old, has a Social Security Number or Individual Taxpayer Identification Number and has a physical U.S. street address can apply to open an Account.
Update 2. Tue Oct 9th, 2018
Simple bank has gone completely silent on this issue and is ignoring my requests for more concrete information. I’ve been pushing them in a polite way, but it seems they decided to give me the cold shoulder instead. Facts and law are hard to argue about, but it seems they are unable to give any valid reason.
Update 3: Tue Oct 30th, 2018 #closingsimple
Simple bank failed in every possible way dealing with this situation. They keep on telling users they are “looking into the issue” but more than a month and nothing happened and no details around their discrimination. The reality is, I don’t need Simple, and neither do you, so the best way to retaliate is by closing your account. Additionally their rates are not that exceptional. You are better off opening a no-penalty CD from Marcus at 2.15% or Ally at 2.10%, which is better than Simple’s 2.02%.
Update Fri Nov 16th, 2018:
Ally now pays 2% on a high-yield savings account. There is no reason to Simple.
#closingsimple
Update Wed March 27th, 2019
Almost half a year passed and nothing changed, see yesterday’s screenshot below (date: March 26th, 2019):
In the mean time a class action suit has been started in California on March 25th 2019, by Unite the People, a nonprofit organization by defense lawyers and legal experts to promote social justice in the United States and deal with immigration and related issues. They are seeking USD $4,000 compensation for those affected by the discrimination. If you have been affected, contact Amitabho Chattopadhyay, amy@pursuitofjustice.org.
Here is the full class action document (Case 3:19-cv-01541):
Update Feb 15, 2020
The lawsuit is still ongoing and now in the hands of Pursuit of Justice. If you are affected, please contact the class council: erin@pursuitofjustice.org.
