Our bank has gone back and forth on this. Currently, we do not pull a consumer report for signers on business accounts. However, once the name line is established for the signer of a business account, that customer can open a personal account and bypass the whole consumer report check.

Do anyone of you pull a consumer report for signers on a business account?

You would need written permission and then what are you going to do with the information - tell the business no - this person can't be on the account? Sounds like a hole in your procedures. A signer on business account is not an existing customer.

We pull a consumer report for all signers on all our business accounts. So far we have not run across any on the OFAC list and that is primary what we are looking for and yes we would deny them being a signer on the account.

rlcarey: On written permission: We have a sign at account opening desks stating that we will use ChexSystems to verify new accounts. Our state does not require written authorization. I realize it is different for loans, but I'm only talking about the deposit side. Good point about the hole in procedures. We realize that, but we have no way of putting a note a customer's name to notify personnel at other branches to run a report for the signers of businesses if the signer wants to open a personal account.

Sunshine Lady: It sounds like t it would be awkward to deny a signer for a business account if he/she was the only signer, or even a business partner. How has that been received? Do you make exceptions?

A credit report is a credit report - whether you are getting it from Experian or ChexSystems. In order to obtain a credit report under the FCRA you have to have a permissible purpose. Since only a signer on a business deposit account has no personal liability on the account, you do not have a permissible purpose to pull credit on them. As such, written permission would be required. This is not a State law issue, nor does any sign on your desk provide a permissible purpose.

Let's make sure we're on the same page here. Put business accounts aside for a moment. I know business accounts are not a permissible purpose for credit reports.

But if an individual comes to our bank to open a personal account, we have a permissible purpose to pull a credit report. We use it for two purposes: CIP verification and negative information. We have turned consumers away for what is on their credit reports. All this has been done without written authorization.

individual comes to our bank to open a personal account,

Correct, they personally applied for an account. That gives you an automatic permissible purpose. A signer on a business account is not applying to the bank for an account. They have no connection or responsibility for the account other than completing bank documentation that is required to be able to sign checks. The same premise applies to an owner of a business when the business applies for a loan and the business owner is not guaranteeing the loan. Without personal liability on the loan, you need written permission to pull credit on the business owner.

I also assume that you are providing a FCRA adverse action notice to those individuals for which you are denying them accounts.

Well so far, we have not had that problem of anyone being on the OFAC list, but if we do deny, we do give them a FCRA adverse action notice. Also, yes if that situation occurred, we would look to see if it merited an exception.

Why are you giving the consumer an adverse action notice. You are not taking adverse action on the connsumer - you are denying the business from adding them as an authorized signer.

rlcarey: thank you for clarifying! And yes, we are providing a Notice of Adverse Action with the required credit reporting agency contact information.