Financial Missteps And Equal Access: Is Bounced Check History Now Private Information?


A consumer reporting agency may collect and compile this information, and it may be accessed, but others cannot use it

If you want to open a consumer checking or savings account at a bank, credit union or other financial institution, the institution will usually review your consumer report obtained from a third-party vendor. These reports include information from other financial institutions regarding your deposit account activities, including the reasons your prior accounts were closed, your overdraft check history and information regarding fraudulent activities impacting your accounts, such as identity theft. An institution will then evaluate the positive and negative information in this report to determine whether to open the account and/or the type of account available to you. There are a number of companies that collect this information and provide this service to financial institutions, such as ChexSystems Inc. and Early Warning Services, LLC. These vendors are considered specialty consumer reporting agencies, are subject to the federal Fair Credit Reporting Act (FCRA), and have been providing these account screening services to financial institutions for years.

Normal business practices

Account applicants generally receive and sign disclosures that authorize the financial institution to obtain a consumer report and advise the applicant that they will be notified if the institution decides not to open the account due, in whole or in part, to adverse information in the consumer report. The Federal Deposit Insurance Corporation (FDIC) has noted that "[e]very bank decides for itself how to evaluate the information in a consumer's report" and "just as a negative credit report can hurt your ability to borrow from a financial institution, a [negative] checking account history ... can hurt your ability to open a new account." These account screening practices have been an integral component of know your customer due diligence and risk management programs at many financial institutions. A financial institution may not, after all, want to open a checking account for someone with a history of writing bad checks and incurring nonsufficient funds fees that may remain unpaid.

New perspective

The New York State Attorney General, however, has a different point of view. On June 16, 2014, Attorney General Schneiderman announced that Capital One had agreed to revise its policies on the use of these specialty consumer reporting services in evaluating...

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