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Closing An Account As Result Of Negative ChexSystems Report
by Ken Golliher, BOL Guru
BIO AND CONTACT INFO
Question: We recently opened a checking account for a new customer who had no records with ChexSystems. About one month later we received notice that they had since been reported to ChexSystems, "Account closed for account abuse." Do we need to close this account or can we watch it for suspicious activity? Is there a reg that covers this?
Answer: There is no law that dictates your choice, but if you decide to close the account, there are legal considerations. If you refuse to open an account or decide to close one based on information from a negative data base, the customer is entitled to know why: i.e., receive a FCRA notice. There is no federal law that requires you to provide a specific amount of advance notice that you are closing a checking account, but it is common that banks give 10 days' to two weeks' notice in order to let outstanding checks clear.
My suggestion is that you monitor the account and, if the customer's handling of it does not fit within your norms, you close it based on your own experience, but perhaps a little sooner than you might have otherwise.
First published on BankersOnline.com 08/11/03
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