In the process of approving an applicant for a checking account, we pull ChexSystems and base our decision on the results. We understand ChexSystems to be a type of consumer report, which I believe would make it necessary for us to have the applicant's permission before pulling that report for a permissible purpose. We accomplished this by having every applicant interested in opening an account sign a document giving us that permission. Our operations manager says other banks are not having the applicant sign anything when an account is declined, but I cannot find any information to support this. I would appreciate any suggestions on what other banks are requiring in regard to documentation for declined accounts. Thanks!

Under section 604(a)(3)(F)(i), a credit bureau is authorized to issue a consumer report to a person (such as a bank) that "otherwise has a legitimate business need for the information in connection with a business transaction that is initiated by the consumer." An application to open a deposit account is the initiation by a consumer of a business transaction with the bank.

The mere request to open a deposit account, even if not in the form of a written application, provides the authority for the bank to order the consumer report. No separate explicit authorization is needed.

Note that the implicit authorization for requesting a consumer report does not apply to an authorized signer.

If I ask to open a checking account with your bank and to have Mary Jones as an authorized signer on the account, you have permission to request a consumer report on me, but not on Mary.

If XYZ, Inc., opens a checking account with your bank, you don't have authority to request consumer reports on the authorized signers on the account.

You would need to have a separate, written authorization from the authorized signers in these two examples to obtain consumer reports on them.

Thank you!