Personal Finance

Zombie accounts could be a real nightmare for investors

Key Points
  • Consumers need to watch out for old accounts that are reopened or new accounts that are created in their name.
  • Free reports from organizations like ChexSystems can reveal problematic banking activity.
  • Individuals should take other steps to make sure they stay aware of potential red flags of suspicious activity on their accounts.
Mggggggh... brains.
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You thought that old bank account was dead, but really it's alive. Welcome to the scary world of zombie accounts.

Zombie accounts are bank accounts that consumers closed but have been reopened. These accounts, coupled with phantom accounts — which are created in a consumer's name without their knowledge — are creating real nightmares for some investors.

Ken Tumin, founder and editor of, said he himself was the victim of a zombie account.

First, Tumin noticed statements in the mail from a checking account he thought he had closed. Then, he noticed the balance for the account on the statements became negative.

After investigating, Tumin found that when he closed a safety deposit box at the bank, the deposit for it was transferred to the old checking account. The transfer prompted the bank to reopen the account. Because the funds in the account were below the required minimum balance, the bank also charged fees.

"If I didn't get the paper statement, there's no telling how long that would have lasted," Tumin said.

The Consumer Financial Protection Bureau does not track how many zombie or phantom accounts exist. But consumers should be on the lookout for this kind of activity. Tumin said he has heard of a couple of cases where accounts were potentially created from the Equifax data breach.

How to protect yourself from identity theft in the wake of Equifax data breach
How to protect yourself from identity theft in the wake of Equifax data breach

Consumers should take several steps to make sure that old accounts that are reopened or fraudulent accounts that are created don't haunt them.

First, pull a report from ChexSystems, a specialty consumer reporting agency. Like agencies that provide free credit reports, such as Experian, Equifax and TransUnion, ChexSystems will provide consumers with a free report once a year. Unlike reports from traditional credit agencies, the ChexSystems report will show activity on bank accounts that have been opened in your name.

Next, consumers need to be sure to check their monthly statements for any activity they do not recognize. By accessing that information online, consumers can track that information in real time.

"If there's an account that's created without your authorization, you might be able to see it online," Tumin said.

Other warning signs that consumers should watch out for, according to the CFPB, include money missing from your accounts, bills you do not recognize and incorrect information on credit reports, including balances that don't match up or accounts you did not open.

Consumers who notice any of these activities should notify their bank or financial institution right away, according to the CFPB. They should also consider putting a security freeze on their credit report or setting up fraud alerts.

"If you see anything out of the ordinary on your financial statements or credit reports, no matter how small, you should take action immediately," according to a blog post on the CFPB's website.