A resident of South Florida has initiated a legal battle against a major banking institution, alleging that her matured certificate of deposit (CD) was unlawfully transferred into a new low-interest account. The lawsuit, filed in November 2023, accuses the bank of violating its deposit agreement and seeks class action certification. Tunny Solomon, from Miami Beach, opened a 14-month CD with $50,000 in October 2018 at what was then New York Community Bank. After the CD's maturity, instead of transferring the funds to an interest-bearing savings account as agreed, the bank allegedly rolled over the funds into a new CD with an extremely low interest rate of 0.02% without obtaining her consent. This unauthorized action has led to significant financial losses for Solomon.

Details of the Alleged Unauthorized CD Transfer

In the golden autumn of 2018, Tunny Solomon, a resident of Miami Beach, deposited $50,000 into a 14-month CD at a New York Community Bank branch in Dade County, Florida. The CD carried an interest rate of 2.65%. Upon maturity on December 25, 2019, according to the terms of the agreement, the funds were supposed to be moved into an interest-bearing savings account if not renewed. However, unbeknownst to Solomon, the bank, which had rebranded as Flagstar Bank by late 2022, transferred the money into a new CD with a minuscule interest rate of 0.02%, bearing the same account number as the original CD.

Seth Lehrman, Solomon’s attorney from Lehrman Law in Boca Raton, emphasized that this transfer occurred without Solomon’s knowledge or consent, and she did not receive quarterly statements informing her of these changes. The complaint alleges breach of contract, breach of good faith and fair dealing, and unjust enrichment. As a result, Solomon lost out on substantial interest earnings and potential benefits from using those funds elsewhere.

The lawsuit, filed in the Southern District of Florida, claims that Solomon suffered financial losses exceeding thousands of dollars due to the bank’s deceptive practices. Lehrman is seeking additional plaintiffs who may have experienced similar issues with Flagstar Bank or its predecessors, particularly New York Community Bank. He believes this practice was systemic and affected many other customers.

Flagstar Bank, now part of Flagstar Financial based in Hicksville, New York, has not responded to requests for comment. The bank, focused primarily on residential real estate lending in New York City, reported total assets of $100.2 billion by the end of 2024. In the fourth quarter of 2024, its CD balance increased by 27% to $27.3 billion compared to the previous year. Despite facing challenges, including a $252 million loss from commercial real estate exposure in early 2023, Flagstar received a capital injection of $1.05 billion from Liberty Strategic Capital in March 2024.

Lehrman expressed interest in speaking with any consumers who have had similar experiences with Flagstar Bank or other banks, aiming to uncover more instances of such practices.

This case highlights the importance of transparency and adherence to contractual agreements in financial institutions. It serves as a reminder for consumers to carefully monitor their accounts and seek legal advice if they suspect any unauthorized activities. For banks, it underscores the need for clear communication and respect for customer rights to maintain trust and integrity.