Thread Options Tools
#1973112 - 10/30/14 04:45 PM Chex Systems
Lizz Offline
100 Club
Joined: Aug 2013
Posts: 128
Dunkirk NY
If you're opening a new Rep Payee account do you run a Chex Systems for both the Recipient and the Rep Payee ?? Or just the Rep Payee -??

Return to Top
General Discussion
#1973130 - 10/30/14 05:07 PM Re: Chex Systems Lizz
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
The representative payee has applied to do business with you. It's permissible to pull a consumer report (which chex systems is). The person entitled to the benefit has not applied to do business with you. Don't.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1973162 - 10/30/14 06:30 PM Re: Chex Systems Lizz
Lizz Offline
100 Club
Joined: Aug 2013
Posts: 128
Dunkirk NY
OK - Thank you - We always have a discussion in regards to this - I needed to make sure that I was thinking straight....

Return to Top
#1973638 - 11/03/14 03:28 PM Re: Chex Systems Lizz
Milby Offline
Platinum Poster
Joined: Apr 2007
Posts: 953
Tejas
If the account gets reported to ChexSystems, wouldn't that normally be under the name of the person who owns the account (i.e. the beneficiary)? If so, wouldn't running Chexsystems on the beneficiary be prudent since that is where you would discover potential fraud?

Return to Top
#1974137 - 11/04/14 10:08 PM Re: Chex Systems Lizz
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,593
Cape Cod
If that is the ordinary way of reporting such an account, it's simply wrong. The beneficiary of the SSA payments is not your customer and does not own the account. He or she has a beneficial ownership in the funds in the account, but not the account itself.

Further, if the rep payee messed up the account and you reported it under the name of the beneficiary, you've got potential problems for impacting the innocent party's creditworthiness.

And finally, you have no legal right under FCRA to pull the report on the beneficiary, because you aren't doing business with him or her and he or she isn't arranging to do business with you.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#1974714 - 11/06/14 03:06 PM Re: Chex Systems Lizz
ComplianceGurl, CRCM Offline
Gold Star
Joined: Jul 2007
Posts: 497
I'm confused....this is what I have been following.


Titling a Representative Payee Account
Answer by John Burnett, BOL Gurus
Guru Bio

Question: What is the proper titling for a representative payee account for Social Security and what would the relationships be?

Answer: The account should be titled in this format:

IMA REPRESENTATIVE, REP PAYEE FOR
BETTY BENEFICIARY

Betty is the non-signing owner of the account. Ima is the fiduciary. For purposes of CIP, unless Betty is legally incapacitated she is your customer. Betty's TIN should be reported to the IRS in the event a 1099 is generated

Return to Top
#1975303 - 11/07/14 08:17 PM Re: Chex Systems Lizz
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,593
Cape Cod
Well, that is incorrect, and for that I apologize. Things do have a way of coming back to haunt you, don't they!

Can you tell be the URL of that page? I'd like to bring it up to date.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#1975328 - 11/07/14 08:57 PM Re: Chex Systems Lizz
ComplianceGurl, CRCM Offline
Gold Star
Joined: Jul 2007
Posts: 497

Return to Top
#1975338 - 11/07/14 09:03 PM Re: Chex Systems Lizz
ACBbank Offline
Power Poster
ACBbank
Joined: Jul 2006
Posts: 4,159
New York City
John - After all of the accurate and insightful responses you have provided over the years, at no cost to the viewers of BOL, I think I can safely say on behalf of all BOL posters that we are going to look the other way on this one.

smile
_________________________
"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu

Return to Top
#1975342 - 11/07/14 09:10 PM Re: Chex Systems Lizz
ComplianceGurl, CRCM Offline
Gold Star
Joined: Jul 2007
Posts: 497
^^^I AGREE^^^

Return to Top
#1975355 - 11/07/14 09:25 PM Re: Chex Systems Lizz
BrianC Online
Power Poster
BrianC
Joined: Nov 2004
Posts: 6,240
Illinois
In John's defense, the Guru Q & A refers to reporting interest earned on a Rep Payee account to the IRS using the TIN of the beneficiary. Since they are the owner of the funds, this would be correct.

Reporting interest using the beneficiary's TIN is a far cry from reporting the beneficiary to Chexsystems because the fiduciary did not handle the account appropriately.
_________________________
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
www.tcaregs.com

Return to Top
#1975359 - 11/07/14 09:33 PM Re: Chex Systems Lizz
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,593
Cape Cod
Thanks to both of you, but what's right is right. I've updated the page so that I don't have to worry about leading any newbies astray.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#1976526 - 11/14/14 06:53 PM Re: Chex Systems John Burnett
SunnyFL, CRCM Offline
100 Club
Joined: Sep 2004
Posts: 205
FL
John, with all due respect, I have pondered this question all week and finally had to send this post. I actually think the update confuses the subject matter even more. I have pulled several course manuals from years past, and they all describe this type of account as your original 2008 post. What am I missing?

In all my banking years, and believe me it is many, we have opened rep payee accounts as BETTY BENEFICIARY, by IMA REPRESENTATIVE, REP PAYEE. We use Betty's tax ID number, the funds belong to Betty and the account belongs to Betty; it is simply managed by IMA. We have never thought of this account type in the sense that IMA is the "account" owner. (And our policy says we CIP both...never been a problem.)

Having said that, I also understand it is perfectly acceptable to open the account as IMA REPRESENTATIVE, REP PAYEE "FOR" BETTY (such as you described), however, when using Betty's tax ID number you run the risk of a mis-match from the IRS if they do not get the complete title when reporting.

Even the SSA Guide for Representative Payees states:
"To protect the beneficiary’s funds, the checking or
savings accounts title must reflect the beneficiary’s
ownership of the funds and your relationship as a
fiduciary (financial agent). Neither the representative
payee nor any other third party can have ownership
interest in the account. The beneficiary must never
have direct access to the account. Any account title
(under state law) that shows beneficiary ownership
of the account with you as fiduciary is acceptable.
Do not use joint accounts. Here are two ways we
recommend to title the accounts:
• “(Beneficiary’s name) by (your name),
representative payee.”
• “(Your name), representative payee for
(beneficiary’s name).”[/b]

Maybe I am just confusing all this because of the subject of this discussion being "Chex Systems". I hate to keep dating myself, but again in all my years I guess I have been lucky enough not to have to report a rep payee account to Chex Systems. But if I did, I would report the representative payee because they are responsible for management, or in the case being discussed - mis-management - of the account.

Anything you can add to straighten me out would be much appreciated.

Return to Top
#1976541 - 11/14/14 07:27 PM Re: Chex Systems SunnyFL, CRCM
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
The order of names (assuming the representative payee is properly labeled) has absolutely no bearing on who owns or operates the account. Betty Beneficiary by Ima Representative, representative payee is an acceptable way to title a representative payee account. It would actually be preferred because the name that matches the TIN is first in the account title and maximizes the chances of the IRS being able to identify the combination.

In short, it's the better of the two options.

As Brian notes, the order of the names in the account title also has absolutely no bearing on consumer reporting. The representative payee applied to do business with you and is solely responsible for the account activity.

The beneficiary, on the other hand, did not apply to do business with you and has absolutely nothing to do with the account activity. The bank would have no right to pull a consumer report on the beneficiary. The bank would be indefensibly mistaken to report negative activity to the beneficiary.

This started out with a conversation about an orange and turned into a conversation about an apple. John's old post was accurate and had nothing to do with the answer to the post that started this thread.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#1976589 - 11/14/14 08:57 PM Re: Chex Systems Elwood P. Dowd
SunnyFL, CRCM Offline
100 Club
Joined: Sep 2004
Posts: 205
FL
Check, check, and double check. Thanks Ken.

Return to Top