NEW YORK, July 31 (UPI) -- New York City's commissioner for consumer affairs said banks were turning away "hundreds of thousands" of customers for minor reasons.
The New York Times reported Wednesday that 850,000 New Yorkers had no bank accounts and that many are turned down at banks for small indiscretions on their record, such as a bounced check or a late payment.
"Hundreds of thousands of Americans are being shut out [of the U.S. banking system] for relatively small mistakes," said Jonathan Mintz, the city's commissioner for the Department of Consumer Affairs.
Nationwide, there are an estimated 10 million households that do not have bank accounts, which leaves them vulnerable to high fees charged by check cashing services or high rates charged by pay day lenders, the Times said.
"Everything is more expensive," said David Korzeniowski, 23, who said he was told that an overdrawn account was the reason given for a bank turning him down and informing him that he would not be eligible for a checking account until 2016.
Banks say they are protecting themselves against fraud, but consumer advocates say that banks are discriminating against poor people, who are more likely to live from paycheck to paycheck and are more likely to overdraw an account or make a late payment.
Data also shows that since the 2009 financial crisis, banks around the country have shut offices in poorer neighborhoods and gravitated towards wealthier areas, the Times said.
Data suggests banks should be more careful, as fraud associated with new bank accounts rose to $9.8 billion in 2012, a 50 percent jump from 2011, Javelin Strategy and Research reported.
Many are shocked and feel insulted when a bank turns them away, the Times said.
"I just don't understand why they wouldn't want me. It feels unfair," said Tiffany Murrell, a secretary from Brooklyn who was turned down by a bank over a $40 overdraft that occurred in June 2010.
Murrell said she is up to date on all her bills.
It was "insulting and frustrating," that the bank turned her down, she said.