Vanguard Faces Class Action Lawsuit Over $100 Account Closure Fee
From the desk of Jim Eccleston at ÍøÆسԹÏ
Vanguard is facing a federal class-action lawsuit over a $100 fee imposed on brokerage customers who close their accounts and transfer funds to another firm. According to ThinkAdvisor, the lawsuit alleges that the fee constitutes an "unlawful, fraudulent, and unfair assessment."
Vanguard describes the charge as a "processing fee," but the lawsuit argues that the fee is not based on the actual cost of processing account closures. Instead, the complaint characterizes it as a "junk fee" designed to penalize all but the highest-earning customers, discouraging them from leaving Vanguard or punishing them financially if they do. ThinkAdvisor reports that the lawsuit claims that the fee is deceptive, unfair, and imposed in bad faith, asserting that customers had no way to anticipate or avoid it.
The complaint further argues that the fee violates New York state law, which governs Vanguard's brokerage accounts, and disproportionately harms low-to-middle-income consumers while exempting multimillionaires. The fee, along with other new Vanguard charges, took effect on July 1, 2024, after the firm announced the changes two months in advance.
In response, a Vanguard spokesperson stated that the firm had provided clients with advance notice and that the fee complied with all applicable rules and regulations. "ÍøÆØ³Ô¹Ï look forward to vigorously defending against this meritless claim," the spokesperson told ThinkAdvisor.
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