Vanguard Lawsuit: Investment Firm Accused of Unfair Account Closure Fee

Case Overview: A class action lawsuit claims Vanguard unfairly charged a $100 account closure fee to smaller investors, misleading them about the true cost of investing.

Consumers Affected: Vanguard brokerage account holders who were charged the $100 account closure fee.

Court: Court of Common Pleas of Chester County, PA

A $100 charge to close an account may not seem like much for high-net-worth investors, but for everyday customers, it’s raising questions about fairness. Vanguard, a company long known for low-cost investing, is now facing allegations that it unfairly targeted smaller investors with an exit fee that multimillionaires don’t have to pay.

Pennsylvania resident Arthur Kelly Jr., a Vanguard brokerage account holder, filed a lawsuit over the fee, arguing that the investment firm changed the rules without giving customers a way to avoid the charge. His complaint claims Vanguard lured investors in with low fees, only to hit them with new costs when they decided to leave.

Vanguard Accused of Unfairly Charging Account Closure Fee

For years, Vanguard positioned itself as a go-to choice for those looking to invest without paying excessive fees. That reputation helped the firm attract millions of everyday investors. Until recently, anyone who wanted to transfer their funds to another firm could do so without an added charge.

That changed in July 2024, when Vanguard rolled out a $100 account closure and full transfer-out fee. The charge applied to customers with less than $5 million in assets—while wealthier clients remained exempt.

According to the lawsuit, many investors had no idea the new fee was coming. Because it didn’t exist when they first opened their accounts, they had no opportunity to factor it into their decisions. Once they wanted to move their money elsewhere, there was no way around the cost.

Federal Agencies Taking Aim at Hidden Fees

Unexpected charges like these have caught the attention of federal regulators in recent years. The Consumer Financial Protection Bureau has been cracking down on fees that businesses tack on after customers have already committed to a service.

Banks have faced lawsuits over overdraft fees, airlines have been under pressure for charging extra for basic seat selections, and concert ticketing companies have been criticized for adding excessive service fees at checkout.

Kelly’s case against Vanguard places the company’s account closure charge in the same category, arguing that it punishes customers who simply want to move their money.

Other Companies Face Scrutiny Over Unexpected Fees

Vanguard is not the only company facing scrutiny over unexpected charges. In recent years, federal regulators have increased pressure on businesses that impose fees on customers after they have already entered an agreement.

For example, lawsuits have been filed against banks for charging overdraft fees in situations where customers did not have a reasonable way to avoid them. Ticketing companies have also faced legal complaints over surprise service charges that significantly increase the total cost at checkout.

The lawsuit against Vanguard argues that the company’s account closure fee follows a similar pattern—an extra charge added at the back end of a financial transaction, which customers could not have anticipated when signing up.

In the Vanguard junk fees class action lawsuit, Kelly seeks compensation for affected investors and aims to prevent Vanguard from continuing to charge the $100 fee in the future. He is asking to represent all brokerage account holders who paid the fee, which could result in financial reimbursement for thousands of investors.

Case Details:

• Lawsuit: Arthur Kelly, Jr. v. The Vanguard Group
• Case Number: 2:25-cv-00507
• Court: Court of Common Pleas of Chester County, PA

Plaintiffs' Attorneys:

• Kenneth J. Grunfeld (Kopelowitz Ostrow, P.A.)

Are you a Vanguard investor who was charged the $100 account closure fee? Share your thoughts on this lawsuit in the comments below.