Friday, June 20, 2014

Banks have been denying some consumers accounts based on an obscure database (ChexSystems)


Banks have been refusing many individuals checking and savings accounts at all, as they check individuals on a little known database called ChexSystems (customer link).  On Friday, Washington Post reporter Danielle Douglas provided a shocking story on p. A18, Economy and Business, “Bank screening seen as too restrictive”, titled online “Why a guy making $100000 a year can’t get a bank account”, link.  Douglas has another story this week indicating that Capital One (in which I have a little stock) has announced it will not decline new accounts based on this Chex report as in the past.  Phyllis Furman of the New York Daily News also reports on this problem here and reports on Capital One’s action. 
   
Some banks like Wells Fargo offer “second chances” but place restrictions and require a savings account first.
  
I was not aware that individual consumers could be so severely penalized for bounced checks or other debt problems in just getting accounts.  I had heard about this issue in certain businesses, like legal marijuana.  I have only bounced one check in recent years, when I used the wrong book (for a terminated account) to pay a lawn man.  I had one check given to me bounce in 1974 (for about $600) bounced when I was selling a car as I moved into NYC, but the person (a former coworker) made good.  When I lived in New York in the 1970s, I did all my banking at savings banks for a while, finding it paid.  Later, I did use Banco Popular of Puerto Rico.   I almost had a job interview with a French bank.
  
When I worked for RMA in 2003, the debt collector who worked in the next cubicle and coached me and who was very good at it with a low-key approach said he didn’t have a checking account himself.  I thought that sounded strange.

I haven't run into this myself, but it is plausible that, in estate situations, banks could become concerned if heirs or trustees are complying with the terms of their papers.  When you have multiple accounts with different legal entities, it's well to know what you are doing.   
   
It would be a good question as to whether identity theft itself could stop people from being able to get accounts.

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