ChexSystems: Who They Are and How it Affects You
ChexSystems is a company that maintains a subscriber membership service used in the banking industry. The members consist mainly of Banks, and Credit Unions, but can include other types of Financial Institutions.
It provides its members with what it calls deposit account verification services. The members use the information that ChexSystems provides to identify applicants that have had what they classify as a suspect banking history.
ChexSystems maintains a central database containing all of the information that has been reported to them. This information is shared among the network of member banks and credit unions to assess the level of risk in opening new accounts.
When someone applies to open a new checking account at a ChexSystems member bank, a ChexSystems inquiry is made. If the inquiry is returned stating that the person has had previous problems with another bank, that individual will often be denied from opening the account based on that ChexSystems report.
For this reason ChexSystems is considered as a Consumer Reporting Agency. This makes ChexSystems subject to the same laws as the Credit Bureaus that we are all familiar with: Experian, Equifax, and Trans Union.
And like the Credit Bureaus? ChexSystems does not approve nor decline new accounts. It only maintains, and reports, the information in their database which bank members have submitted to them. It is the individual bank who, based on the ChexSystems report, decides whether or not to approve the new account.
Understandably? the majority of people in America who have the very common checking account, and never had a problem, have never heard of ChexSystems.
But for the nearly 8 million people that ChexSystems has on file it is a very real problem. Many people feel ChexSystems has very quietly become the big brother of the banking industry.
ChexSystems is a very necessary service for banks. On average financial institutions are hit with over $1 billion in check fraud losses a year. And they spend more than $200 million to prevent, detect, and prosecute check fraud.
The criticism has been that there are no established guidelines for exactly who gets reported to ChexSystems. It is entirely up to the individual member banks.
There are no procedures to distinguish between the person who may have had one or two unintentional incidents of bank overdrafts? and the individual who truly committed a serious act of fraud like passing numerous checks on a closed account.
Depending on a particular bank's internal policies, a person could have their account closed and reported to ChexSystems for as little as one bounced check.
Once in ChexSystems they are treated all the same, and the record can remain for 5 years.
Bank executives defend the ChexSystems database as a valuable weapon in the battle against fraud and high-risk customers. To help prevent fraud and account abuse, banks and other financial institutions rely on the information from ChexSystems. They say it helps to keep banking services affordable and widely available to the general public.
ChexSystems is also licensed as a debt collection agency. They have a separate department that assist participating members to collect on outsanding accounts. This also makes them subject to the Fair Debt Collection Practices Act (FDCPA)
While ChexSystems is the most widely used database by the banking industry, other similar systems exist, such as TeleCheck, and National Check Protection & Data Verification Services.
If you have recently been denied from opening a checking account due to a negative ChexSystems report, you are entitled to a free copy of that report.
To contact ChexSystems by mail:
ChexSystems, Inc. Attn: Consumer Relations 7805 Hudson Road, Suite 100 Woodbury, MN 55125
Phone: 800-428-9623 or fax at 602-659-2197
Greg Ford is the owner and webmaster of http://www.chexsystemssolutions.com Additional information regarding options for people in ChexSystems can be found there.
MORE RESOURCES:
 Washington Times | US Consumer Credit Increases $14.3 Billion in June (Update2) Bloomberg - Consumer credit rose by $14.3 billion, the most since November, to $2.59 trillion, the Federal Reserve said today in Washington. In May, credit rose by $8.1 ... US June consumer credit rises by $14.3 bln, 6.7 pct annual growth rate Consumers jack up borrowing in June Ahead of the Bell: Consumer Credit |
 RTE.ie | US Government charges 11 in massive credit card fraud case Heise Online, Germany - The US government has charged 11 people with stealing tens of millions of credit and debit card details as part of an operation that targeted numerous ... Video: Feds Charge 11 in Massive Retail Hacking Case US authorities charge 11 with global credit data theft 11 charged over US credit card theft |
Credit Suisse Sued Over Auction-Rate Securities (Update3) Bloomberg - 7 (Bloomberg) -- Credit Suisse Group, Switzerland's second-biggest bank, was sued by Swiss semiconductor company STMicroelectronics NV for allegedly placing ... STMicro sues Credit Suisse over auction-rate debt |
Credit cards: US authorities charge 11 in global identity theft racket guardian.co.uk, UK - American authorities have uncovered a global computer hacking and credit card fraud ring spanning the US, eastern Europe and Asia, officials said. ... Gang charged for theft of 41 million credit card numbers 11 charged in connection with credit card fraud 41 Million credit and debit card numbers stolen |
 Washington Post | Here comes the credit crackdown Independent, UK - One year into the credit crisis, regulators are hard at work on new laws they hope will prevent history repeating itself. Leading investment banks fear a ... Industry group to address credit risk Panel Calls for New Risk Standards Banking Group Proposes Wide Range of Reforms |
 Telegraph.co.uk | Barclays' Profits Hit by Credit Crunch BusinessWeek - by Kerry Capell The credit crunch continues to take its toll on British banks. On Aug. 7, Barclays (BCS) revealed its first-half pretax profits fell by ... Barclays: credit and credibility Income at Barclays declines less than analysts expected Barclays Profit Falls 34% on Securities Writedowns (Update2) |
Consumer credit jumps at fastest rate in 7 months MarketWatch - Consumer credit, excluding mortgage debt, expanded at a 6.7% annual rate in June after rising at a 3.8% pace in May. It was the biggest increase since the ... Credit-card Companies Making It Harder To Say 'charge It' CreditCards.com: Weekly Credit Card Rate Report Reform credit card industry |
 Earthtimes (press release) | Consumer credit rose $14.33 bln in June Reuters - WASHINGTON (Reuters) - US consumer credit expanded at the fastest rate in seven months in June as Americans turned to credit cards and consumer loans to ... Consumer credit rose $14.33 billion in June |
BC-based Lake View Credit Union Selects Open Solutions' Core Platform MarketWatch - Lake View Credit Union has assets of more than $200CDN million and serves 15500 members through three branches. This year, the credit union celebrated its ... |
Bridge Finance Group Provides a $4.0 Million Revolving Line of ... MarketWatch - CHICAGO, Aug 07, 2008 /PRNewswire via COMTEX/ -- Bridge Finance Group announced the completion of a revolving line of credit to Access Distribution, ... |
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