Can an Online Bank Account Be Garnished?

Most people bank at local branches of traditional banks, such as Sun Trust, Bank of America, etc. A judgment creditor can garnish funds in any of the debtor’s bank accounts by serving a writ of garnishment on the bank. One of my clients banks only at so-called “internet banks,” such as ING Direct Bank or Ally Bank. These internet banks typically offer money market and saving accounts with limited check privileges.

The question which came up is how and where does a judgment creditor garnish an “internet bank account” when the internet bank has no branches in Florida. ING Direct has branches in six states other than Florida, for example. Can the creditor serve ING Direct a write of garnishment from a Florida court, or does the creditor have to domesticate the judgment in a state where ING Direct has a branch? Is an internet bank like ING Direct subject to garnishment in any state because, by doing business over the internet, it does business everywhere its customers reside?

I’ve spoken with the legal departments and operation managers at two very large “internet banks.” Neither bank recalls ever being served a writ of garnishment from a court outside their home state. First, the bankers explained that there is no such thing as an “internet bank.” These banks, including ING Direct and Ally Bank, are traditional banks with at least one brick-and-mortar branch somewhere. Your deposits in an internet bank are not floating in the internet cloud; your money is commingled with money deposited in their bank by mail, direct deposits, and ATM machines. The “internet” aspect of an “internet bank” refers only to the way they market deposits. The bankers at both internet banks told me that although they have never had to answer this question they think that a creditor in Florida would have to domesticate the judgment in another state before garnishing the Florida debtor’s account at their “internet bank.”

My initial legal research suggests that internet banks based in one state are not subject to the jurisdiction and garnishment writs of all other 49 states just because they offer online banking and accept deposits via the internet unless the bank demonstrates an intent to target customers the debtor’s state.