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#1529410 - 03/31/11 02:41 PM New Account for Customers on Chexsystems
Kristi Offline
Member
Kristi
Joined: Feb 2005
Posts: 94
We would like to establish a new checking account for customer who have been reported to Chexsystems. We will be charging a monthly fee to the customer and only allow the customer to use a debit (no check writing would be allowed). We would require direct deposit into this account and would like to have the ability to freeze the account if the direct deposits stop.
Are there any regulations out there that would prevent us from doing this or does anyone do something similar?

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Operations Compliance
#1529611 - 03/31/11 05:04 PM Re: New Account for Customers on Chexsystems Kristi
BrendaC Offline
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BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
Hmmm, thinking aloud. So if I lose my card or forget my PIN, I can't come into the bank to get any money out of my account? If my direct deposit stops, you "freeze" my checking account?

I think you still have a few issues to work through to avoid conflicts with Reg CC and the UCC.
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#1529621 - 03/31/11 05:12 PM Re: New Account for Customers on Chexsystems Kristi
BurntSienna Offline
Diamond Poster
Joined: Aug 2006
Posts: 2,407
Midwest
We don't have anything similar to this. I'm not sure about the regulatory issues, so I can't answer that. However, two purely practical matters jump to mind:

1) How do you plan to police/enforce the "no check writing"? Anyone can order checks from a dozen places online or by phone and start writing checks. Are you going to manually monitor this daily and close the account immediately and return all checks if they start writing checks? That seems like a lot of monitoring work and if you miss one day monitoring, you'll miss your 24 hour deadline to return the checks, so what do you do then? Do you have any way to automate/enforce that restriction? I do not think our system would present any way to do that.

2) Freezing the account if the direct deposits stop could present problems depending upon what the source of those direct deposits are. For example, if direct deposit comes monthly from social security and it's direct deposited one month (and not fully spent so there remains a balance), you can't just go freezing those funds because one spouse subsequently dies and the direct deposits stop the next month. I doubt the feds would be too happy with that and I know the customer wouldn't be!

My advice: I'd get your bank's compliance and legal departments involved and think this one through fully before designing this account. This seems like a bad idea.
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#1529799 - 03/31/11 06:43 PM Re: New Account for Customers on Chexsystems BurntSienna
Kristi Offline
Member
Kristi
Joined: Feb 2005
Posts: 94
Thanks for your thoughts. The product is at the beginning stages so those are just some thoughts that have been thrown out. Those are good points and we will definitely have the compliance department look into as well.

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