Originally Posted by
RedSun
Are you a top lawyer to state the above? What if someone stole 7 MM MR points, cash out for $10,000, then quickly transfer the money out? It is clearly a money laundering risk.
I do not think it is un-profit customer issue. It is more a compliance issue and related risk. The bank can be fined for any possible illegal activities. But shutting down account is not one of them. I would have done the same if I ran the bank.
Schwab offers that cashout feature to its accounts. Of course it can take action in case of fraud. There was no fraud here. There was no claim by Schwab of fraud.
If Schwab wants to limit the redemption feature, it should state the limits. Instead, it offers supposedly unlimited redemptions--and then closes accounts when customers do too large redemptions or redemptions too fast or redemptions that make the account unprofitable by Schwab's metrics. There is no provision in its contract for closing accounts that are unprofitable.
Oh, I know that Schwab somewhere has some boilerplate clause saying it can close accounts at any time for any reason or no reason. So, sure, I grant your point--doing so probably isn't illegal. But it sure is unfair. By doing so, it makes its claims that redemptions are unlimited a lie. That's false advertising and deception--and I don't have to be a lawyer to call that illegal.