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About the ChexSystems Bites! Web Site
ChexSystems Bites is a consumer advocate web site run by volunteers. Our web site helps provide information to those who have been denied a checking account due to the results of a search with the ChexSystems network.

Why did we write this?
Because life without a bank account sucks!

We believe that ChexSystems is allowing the banks to abuse its system. Banks are using ChexSystems not only as a tool for reducing risk, but more importantly, the banks are using it as a tool to eliminate the bottom tier of consumers -- those who maintain low account balances. You might ask, "Isn't this illegal?" It probably is, but the practice continues day in and day out.

Once you are on the ChexSystems blacklist, banks can legally use it to systematically eliminate you and everyone else who has ever had even the slightest problem in the past.

If you don't believe that banks would want to do this, then please read this article or this article.

If you read closely, here is what is happening: The Federal Reserve (the FRB's FCA office, actually) tells banks that each new account costs them $200. Banks make their money by lending out the money that is deposited into checking and savings accounts. Those who have been reported to ChexSystems do, as a group, carry lower balances in their accounts. By eliminating anyone with a ChexSystems record, banks are inexpensively able to weed out those who will cost more than they are worth. It has very little to do with your risk as an account holder. It has everything to do with the bank's bottom line. Never mind the fact that millions of Americans are harmed in the process.

Why does ChexSystems let this happen?
Because their customers, the financial institutions, want this ability. The lowly consumer does not even factor in here -- ChexSystems sees no reason to treat you as anything other than an overhead cost to their system.

Why is this wrong?
Banks benefit from the protection given them with heavy government regulation. But with this benefit comes some responsibility to serve the public -- something the banks are escaping, legally! Government, by letting this continue, is failing its citizens who now have no way to exchange the fruits of their labor (e.g., direct deposit of their pay) for goods and services. In addition, landlords and other organizations are now requiring a checking account as a minimum requirement.

We could not stand idle and watch this continue to happen. You shouldn't either.

You can help!
The Federal Reserve will now accept your bank complaint. Let them know why your bank is wrong for refusing you an account. And you can voice your disapproval of ChexSystems to the FTC using this online complaint form. (They don't follow up on your complaint, but instead will simply collect statistics to help identify organizations which might be violating the law.)

The Solution
If, as the banks claim, the risk of loss is their true reason for using the ChexSystems blacklist then there is no reason banks have not come up with a solution for dealing with the problem. Especially in this day and age of technology surely there is a simple solution. For instance, the banks could grant a savings-only account when an applicant has a negative ChexSystems record. Savings accounts are basically free of risk to a bank. Or perhaps the banks can grant accounts which would not include paper-checking privileges (e.g., teller and ATM transactions only) and to further eliminate risk they could hold funds on deposits until the money has safely cleared. There are government initiatives promoting this same argument, however the banks keep dragging their feet.

There are other solutions which also would eliminate the risk that banks want to avoid (e.g., run a credit report to supplement a ChexSystems report) but unless they are spurred to action by regulation, we doubt any will be implemented.

Also, if you are curious as to what the people on the inside at ChexSystems are like then please read this message we received.

Support the boycott of Deluxe!
Order your own checks for your TD Waterhouse account otherwise they will use Deluxe Check Printers, a sister company of ChexSystems. Deluxe Check Printers, Current Checks (aka Checks Unlimited) and Designer Checks are all owned by the same company that also owns ChexSystems. Show your disapproval of ChexSystems by ordering your blank checks from an alternate source.

We want to provide more information on all things related to ChexSystems. If you have any information that you feel will help or is informative, please post to the website which we monitor regularly.

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