What is ChexSystems?
I've had a number of people write me and tell me that they have been unable to open a checking account because of ChexSystems. I've decided to check it out for myself and it seems to be valuable information.
How it works:
U.S. banks and credit unions report incidents to ChexSystems to protect themselves and other banks in the future. You get reported to ChexSystems if your account is closed for "cause." What is "for cause?" Banks differ greatly between them as to what valid reasons are for closing an account. Here are some examples:
- The bank was unable to collect for an overdraft, ATM transaction, or automatic payment which they honored on insufficient funds.(Regardless of amount, and often without waiting more than a few days!)
- Multiple overdrafts.
- Savings account, debit card or ATM abuse.
- Fraud.
- Providing false information in opening account.
Each incident stays on your record with ChexSystems for FIVE full years from the date the incident was reported.
Getting an incident reported to ChexSystems is the Kiss Of Death for your financial future. Most banks now say: "Our bank policy is that we will not open a checking account for you if you have one or more incidents reported to ChexSystems." Scary.
Do Banks Open Accounts & Close Them Later?
Unfortunately yes, according to this site.
"It seems more common amoung some banks than others. Some banks have online applications that will approve immediately. Then the bank will wait until the signature card is sent in to actually look at the Chexsystems report. At that point, they will send back the initial deposit and close the account.
"Then there are other banks that do "sweeps" on accounts. This is where a bank, generally the loss prevention department will do a random check on accounts with chexsystems. If they find that the customer has a chexsystems record, they then will determine that they person may be a risk and they will freeze account, and later close it.
For more details about this system and what to do if you get reported, check out these excellent resources:
Non-Chexsystems banks
Want to find a non-ChexSystems bank? Here are some free resources (yeah, they're REALLY free). However, bank policy changes ALL of the time, so you should call these banks first to see what their current policy is.
Chexsystems for members (like banks)
Banks and credit unions can call (800) 328-5120* or (800) 328-5122* to reach ChexSystems' Inquiry Department. At this number, your banker (but not you) can obtain the details in your record immediately.
Tip #1 Your banker can call this number to get all the information in your files and according to FCRA Section 607 (c) regulations, ChexSystems cannot discourage your banker from relaying that information to you.
Tip #2 ChexSystems now offers a customer service number, (800) 513-7125, for consumers to reach a human there. If the wait time on hold at that number is too long, and you REALLY want to speak to a human, sometimes you can ask for a supervisor at either of these 800 numbers and perhaps someone may be able to talk with you. Additionally, you can try calling (972) 247-5100, and press "0". Tiffany Haley is an employee who handles consumer complaints, and she can be reached at (972) 247-5100, extension 8014. Her supervisor's name is Janette Roman. Nelly Kennedy is the manager of consumer relations. Or else, try (972) 280-8580, then press the # key, and enter random 3 digit extensions until you find someone on the inside at ChexSystems who will take your call. Either you will find someone this way, or after the third attempt, your call will get forwarded to a human.
July 8, 2002 update:
Can you believe it? ChexSystems now does collections: http://www.chexhelp.com/english/publik/faq.htm
Feb 15, 2005 update:
There are 2 other major specialty companies that report on check writing history:
Shared Check Authorization Network (SCAN) maintains a database of returned checks and instances of fraud. It provides check authorization and verification to member retailers.
Toll-free number: (800) 262-7771 (U.S., Guam, and Puerto Rico)
Fax: (800) 358-4506
Web: www.consumerdebit.com/consumerinfo/us/en/consumerreports/index.htm
TeleCheck Maintains a database of returned checks and instances of fraud. It provides check authorization and verification to member retailers.
Toll-free number: (800) 209-8186.
Web: www.telecheck.com.
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