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#1970883 - 10/21/14 06:50 PM
Chexsystems - Checking Account Denied
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Member
Joined: May 2008
Posts: 68
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We utilize the Chexsystems database to consider the opening a new deposit account. If the customer has a negative record we offer them an alternative checking product. I could not determine how to apply the counteroffer situation in reading section 603 (adverse action definition)and 615 of the FCRA.
If the customer accepts the alternative checking product are we still required to provide the customer with a verbal, electronic or written notice of information under section 615?
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#1974205 - 11/05/14 03:21 PM
Re: Chexsystems - Checking Account Denied
Paradise
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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The word "counteroffer" does not appear in the FCRA as it does in the Regulation B. It also does not appear in the referenced sections of the ECOA.
If they don't get what they want based on their credit report, you owe them a FCRA AAN notice.
P.S. Don't tell the regulators - this has passed under their radar for years.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1974984 - 11/06/14 11:08 PM
Re: Chexsystems - Checking Account Denied
Paradise
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Diamond Poster
Joined: Dec 2008
Posts: 1,268
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Where do I find a model FCRA AAN ? I just can't figure out how your answer applies, but I'm just starting a FCRA and I'd like to see if we have a violation here, so any help you can give me in understanding will be appreciated.
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#1974989 - 11/07/14 12:08 AM
Re: Chexsystems - Checking Account Denied
Paradise
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1975036 - 11/07/14 02:54 PM
Re: Chexsystems - Checking Account Denied
Paradise
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Diamond Poster
Joined: Dec 2008
Posts: 1,268
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Thanks rl-If I'm understanding you correctly, in the case of a denied checking account due to a Chex systems report, these are the only AANs the regulation allows?
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#1975095 - 11/07/14 03:52 PM
Re: Chexsystems - Checking Account Denied
Paradise
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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Allows? I think you meant "requires". You can provide such things as reasons for the denial if you want to. Doing so would not violate anything but it is not required.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1983129 - 12/15/14 07:30 PM
Re: Chexsystems - Checking Account Denied
Paradise
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Member
Joined: Nov 2013
Posts: 55
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I am pretty new to compliance and am trying to create a formal review of AAN in new accounts. Our bank uses the Chexsystem report and the new account rep looks at the history only; they do not consider the Qualifile score that automatically is provided. We complete the FCRA portion of the AAN. I am pretty certain that we should have it in writing either by policy or procedure that we do not consider the "score" so the examiner or auditor does not question why we have not completed the Reg. B portion, right? My second question is should the potential new account customer sign an authorization for the new account rep to pull the Chexsystem report? We don't have them sign the signature card until we actually open the account that has the language in it already. Is a signature necessary prior to pulling it or only if we consider the "score"? My lender side of my brain keeps telling me we need an authorization to pull the report from Chexsystem, consider the history and deny if necessary, providing the AAN. Also, besides reviewing how the AAN is complete, what else should I be looking for in this review I am trying to create? A copy of the potential new customer ID is attached to the AAN. Some type of discrimination review also? How do other banks do this? As usual, any help is greatly appreciated. Thank you.
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#1983137 - 12/15/14 07:44 PM
Re: Chexsystems - Checking Account Denied
Paradise
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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If they apply for a deposit account, you have a permissible purpose without a signature as long as the applicant in front of you is going to be liable on the account (i.e., it would not apply to an authorized signer).
If you don't use the score, stop paying for it and get it removed. End of argument. Otherwise - good luck on making the argument that you don't look at it.
There are no fair deposit laws.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1999732 - 03/04/15 04:35 PM
Re: Chexsystems - Checking Account Denied
Paradise
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Platinum Poster
Joined: Nov 2003
Posts: 530
Midwest
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I have a similar question. We are moving from Chexsystems to Lexis Nexis where we will be given a score, but it's not a credit score- more of a fraud score. If we deny the consumer a new checking account because their fraud score is too low, does this require us to send the credit score notice with the FCRA AAN?
We think there will be a LOT of confusion and concern for customers, since the fraud score is quite different from a credit score.
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#2000123 - 03/05/15 11:16 PM
Re: Chexsystems - Checking Account Denied
Paradise
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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Are you referring to their FraudPoint product?
The say: "The FraudPoint services are not provided by “consumer reporting agencies,” as that term is defined in the Fair Credit Reporting Act (15 U.S.C. § 1681, et seq.) (“FCRA”) and do not constitute “consumer reports,” as that term is defined in the FCRA. Accordingly, the FraudPoint service may not be used in whole or in part as a factor in determining eligibility for credit, insurance, employment or another purpose in connection with which a consumer report may be used under the FCRA."
It is interesting that Chexsystem originally said almost the exact same thing verbatim when it came out with its scoring model.
Ask for their legal opinion and the confirmation letter from the regulators.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2002387 - 03/18/15 04:53 PM
Re: Chexsystems - Checking Account Denied
Mari Keller
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Platinum Poster
Joined: Aug 2010
Posts: 528
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I am pretty new to compliance and am trying to create a formal review of AAN in new accounts. Our bank uses the Chexsystem report and the new account rep looks at the history only; they do not consider the Qualifile score that automatically is provided. We complete the FCRA portion of the AAN. I am pretty certain that we should have it in writing either by policy or procedure that we do not consider the "score" so the examiner or auditor does not question why we have not completed the Reg. B portion, right? My second question is should the potential new account customer sign an authorization for the new account rep to pull the Chexsystem report? We don't have them sign the signature card until we actually open the account that has the language in it already. Is a signature necessary prior to pulling it or only if we consider the "score"? My lender side of my brain keeps telling me we need an authorization to pull the report from Chexsystem, consider the history and deny if necessary, providing the AAN. Also, besides reviewing how the AAN is complete, what else should I be looking for in this review I am trying to create? A copy of the potential new customer ID is attached to the AAN. Some type of discrimination review also? How do other banks do this? As usual, any help is greatly appreciated. Thank you. This is in response to your first question, and FWIW. During our most recent FDIC exam, we discussed this with the examiner and his opinion is that bankers "over-think" the FCRA AAN disclosure requirement when it comes to adverse action on deposit products. His guidance was that the policy and procedures should be identical as to the FCRA requirements on the credit products. i.e., if you received a consumer's credit score and it was used in your decision to deny credit, you owe them the credit score information. If the score was not used in your decision to deny credit, you don't. The same rationale can be applied to a score used in a decision to deny a consumer from receiving the deposit account. Not giving any guidance here, just passing along one examiner's guidance to a bank.
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#2002754 - 03/19/15 07:46 PM
Re: Chexsystems - Checking Account Denied
Paradise
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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So basically they regurgitated the regulation to you. They are always so helpful.
The real issue in that post is they say they get the score but they don't use it. Well, in my book that's poppycock. If you aren't going to use it, why is the bank shelling out good money paying for it??
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#2002831 - 03/20/15 12:47 PM
Re: Chexsystems - Checking Account Denied
rlcarey
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Platinum Poster
Joined: Aug 2010
Posts: 528
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So basically they regurgitated the regulation to you. They are always so helpful.
The real issue in that post is they say they get the score but they don't use it. Well, in my book that's poppycock. If you aren't going to use it, why is the bank shelling out good money paying for it?? I agree with you. His point was that we get a credit score every time we pull a credit report for a loan application, but the score is not always a factor used in the credit decision and thus no disclosure is required if not. The same rationale can be applied to adverse action in opening deposit products without being out of compliance with FCRA. Oh and he threw in the obligatory "consistency is the key" to your procedures and practices. Again, FWIW.
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#2002836 - 03/20/15 01:03 PM
Re: Chexsystems - Checking Account Denied
Paradise
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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Yes, occasionally having to deny an account application (both credit and deposit applications) on factors other than the score is one thing, but that is vastly different from making the statement, yes, we get the score however it never is considered nor does it ever impact our decisions.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2102169 - 10/06/16 06:31 PM
Re: Chexsystems - Checking Account Denied
rlcarey
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New Poster
Joined: Sep 2016
Posts: 1
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Would an AAN be required for both ChexSystems and a credit report if the system ran both and the account was denied?
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#2102181 - 10/06/16 07:09 PM
Re: Chexsystems - Checking Account Denied
Paradise
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10K Club
Joined: Jul 2001
Posts: 83,396
Galveston, TX
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If they contributed to the denial - of course.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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