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 BankRate.com article or
this BankStocks.com 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
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.)
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
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.
boycott of Deluxe!
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
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
ChexVictims.com website which we monitor regularly.