We believe that you would be able to close a checking account that receives direct deposits of Social Security payments, provided that you follow all of the notice requirements in your account agreements and under the ACH direct deposit rules.

The “Green Book” (the Treasury’s Guide to Federal Government ACH Payments and Collections) requires thirty days’ written notice before a financial institution may close an account that is receiving federal benefit payments. Green Book, page 1-57. We are not aware of any other federal guidance that would require a bank to keep a deposit account receiving federal benefit payments open.

You also may want to consider whether the termination of the account was based on a credit report of the customer. It is possible that the bank will need to send an adverse action notice to the customer under the Fair Credit Reporting Act (even though it would not be required under the Equal Credit Opportunity Act, which applies only to “credit,” defined as the right to “defer payment of a debt.” 12 CFR 1002.2(j)) The FCRA defines “adverse action” to include decisions on any transactions initiated by a consumer that are “adverse to the interests of the consumer,” whether the decision is credit-related or not. 15 USC 1681a(k)(1)(B)(iv). However, it requires you to send an adverse action notice only if the bank’s decision was based “in whole or in part on any information contained in a consumer report.” 15 USC 1681m(a).