British challenger Monzo Bank grapples with a growing number of customers claiming it froze or shut down their accounts without warning, some alleging fraudulently taken payments.
The number of complaints against the bank received by Resolver, the independent online complaints resolution service, has grown to 700 in just over a year, the gripe settling service says.
The complainants, most of them coming forward in the last six months, allege that Monzo froze their accounts for no apparent reason. Others claim the bank has refused to refund fraudulently taken payments.
A Facebook group of irate customers
In August, outraged customers formed a private Facebook group entitled “Monzo stole our money”.
Membership of the group has quickly reached 1,030, with 367 new members joining in the last 30 days. Most allege that Monzo froze their account and left them in financial difficulty.
The social media group bills itself as “a place for everyone to discuss the online bank ‘Monzo’ and how they have closed [our] accounts and will not refund our money”.
Only group members can see who’s in the group and what they post, but the site shows that 69 comments were posted in the last 30 days. Some posters have reported taking the bank to court to recover their money.
Watchdog and review site
In October, a BBC Watchdog programme about the issue, had this to say:
“The online bank is freezing accounts because they believe there is suspicious [activity]. And under money laundering regulations, it does have the right to freeze and close an account. But the number of cases Watchdog has heard about, and the delays some people have experienced while waiting for their funds, raise questions over whether Monzo is getting it wrong when it comes to freezing accounts.”
On the review website Trustpilot, 13% of reviewers rate Monzo as “bad” at the time of writing. One poster reported that “my account was frozen with all my money in it. Left with no cash, I was told to try local food banks to be able to feed my baby”
Another reported being stranded at a petrol station with no money to pay. Others say they were left helpless abroad after their accounts were suddenly frozen.
Monzo’s response: “It’s the law and it keeps you safe”
The online bank maintains that it has done nothing wrong. “Blocking accounts is something all banks have to do sometimes,” it says, as it is a legal requirement.
Because of anti-money-laundering and counter-terrorism-financing rules, “we have obligations to act in certain ways when we detect or suspect that accounts are being used for criminal activity. And that’s a good thing. It protects us from terrorists and money launderers, and protects you from crime.”
Broadly speaking, Monzo said, accounts are frozen in the following circumstances:
- We spot unusual activity (e.g., account shows signs of being used for crime or money laundering)
- We identify a high-risk customer (e.g., we’re told by other banks that a Monzo account has been linked to financial crime in their system)
- The police tell us to block an account (i.e., as part of a crime investigation)
“And sadly it’s common for criminals to try and get into their accounts by putting pressure on us, and sometimes getting other people to join in too,” the bank says. “This can be as simple as phoning up with a sob story or posting on our forum that their family can’t eat because of Monzo. This is all part of the job and unfortunately just something we have to deal with. But it means that you should always take these stories with a grain of salt.”