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Simple is closing some customer bank accounts, and users are mad as hell

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Simple, the online banking service that promised to be a better alternative to big banks like Chase or Citibank, is falling short of some users’ expectations. This time, it comes as a result of the sudden and surprising notice customers received alerting them that their accounts would be closed next month.

On Thursday, Simple sent notice to a small number of customers with the subject line “We have to close your account on May 13.” The notice went on to explain that the closures were the result of a massive account migration the company has been working on for the last several months. Those users wouldn’t make the cut before Simple’s contract with its former partner bank ended, leaving them out in the cold.

Simple launched its banking service in 2012, offering a forward-thinking and tech-enabled alternative to traditional brick-and-mortar banking options. With a slick web UI and mobile apps for managing customers’ money, Simple set itself apart from the monolithic banking products of the day.

In reality, the service sometimes fell short of some users’ expectations, due to occasional outages and glitches that plagued users even after it was acquired by BBVA for $117 million three years ago.

Simple’s acquisition by BBVA and its migration to the Spanish banking group’s infrastructure is the main reason behind the account closure notices issued yesterday. Until recently, Simple relied on The Bancorp Bank as its underlying partner bank where accounts were held.

Internally, the plan was always to move accounts over to BBVA Compass, and Simple announced the transition about a year ago. Last September, Simple began sending the first of its transition letters to customers, and has been migrating accounts from The Bancorp to BBVA Compass ever since. Rather than try to move everyone all at once, it did so in waves so that it could handle customer service requests as they came up.

According to a Simple representative, the company sorted customers by account activity and complexity to ensure the migration flow worked through a wide range of scenarios. Simple also says it invited customers with the most complex accounts to move earlier so that it could work through any issues that surfaced.

Unfortunately the company wasn’t able to get to everyone before its deal with The Bancorp ended and it would be forced to close the remaining accounts.

We first became aware of the issue after Aaron Frank, a Simple customer and founder of YC-backed credit card startup Final, posted his notice to Twitter yesterday. But he’s not alone: Other Simple users have taken to Twitter to complain about the way the company is handling account closures.

Frank told me that he was aware of Simple’s account migration to BBVA long before hearing from the company yesterday, and even requested back in January an update on when he would be invited to migrate his account. In an emailed response from the company, he received the following note:

Hey Aaron,

We are sending customers emails about moving there [sic] account in batches, which is why you haven’t received anything just yet. But not to worry, you will be getting information on how to move your account very soon!

Let me know if you have any other questions!

Frank has since been contacted by Simple customer support, but not everyone is as lucky. For its part, Simple claims that the notices were sent to less than 1 percent of its users — 0.7 percent, to be exact — and the vast majority of customers were migrated to the new system with no problems.

Still, with something as sensitive as banking, inconveniencing even a small number of users can have an outsized effect on public perception. As with other previous setbacks, it takes a long time to build consumer trust when it comes to dealing with someone’s money — and sending someone a notice that you’re closing their bank account in 30 days probably doesn’t help.