ChexSystems— Everything You Need to Know about this Bank Checking System
Written by: Kristy Welsh
Last Updated: January 29, 2012
If you have been turned down for a bank account, you might have a negative record with ChexSystems. ChexSystems provides information to banks and credit unions about checking or savings accounts that have been closed because of mishandling. The reasons vary but can include unpaid overdraft or nonsufficient-funds fees, account fraud and identity theft. Banks screen applicants for new accounts and might deny anyone who has a bad banking history. ChexSystems is very similar to the familiar credit reporting bureaus, but they just have a different report and dispute process.
How ChexSystems Works
U.S. banks and credit unions report incidents to ChexSystems to protect themselves and other banks in the future. You get reported to ChexSystems if your account is closed for "cause." What is "for cause?" Banks differ greatly between them as to what valid reasons are for closing an account. Here are some examples:
- The bank was unable to collect for an overdraft, ATM transaction, or automatic payment which they honored on insufficient funds.(Regardless of amount, and often without waiting more than a few days!)
- Multiple overdrafts.
- Savings account, debit card or ATM abuse.
- Providing false information in opening account.
Each incident stays on your record with ChexSystems for FIVE full years from the date the incident was reported. You are entitled to see your Chexsystems Report once a year for FREE, just like you are entitled to a free credit report from Experian, Equifax and Transunion.
Getting an incident reported to ChexSystems is the Kiss Of Death for your financial future. Most banks now say: "Our bank policy is that we will not open a checking account for you if you have one or more incidents reported to ChexSystems." Scary.
Do Banks Open Accounts & Close Them Later?
It seems more common among some banks than others. Some banks have online applications that will approve immediately. Then the bank will wait until the signature card is sent in to actually look at the ChexSystems report. At that point, they will send back the initial deposit and close the account.
Then there are other banks that do "sweeps" on accounts. This is where a bank, generally the loss prevention department will do a random check on accounts with chexsystems. If they find that the customer has a chexsystems record, they then will determine that they person may be a risk and they will freeze account, and later close it.
For more details about this system and what to do if you get reported, check out these excellent resources:
- On our website: Sample letter requesting ChexSystems to validate and remove a listing from their database.
Chex Systems, Inc.
7805 Hudson Road, Suite 100
Woodbury, MN 55125
Fax: (602) 659-2197
Instructions can be heard by calling:
Want to find a non-ChexSystems bank? Here are some free resources (yeah, they're REALLY free). However, bank policy changes ALL of the time, so you should call these banks first to see what their current policy is.
- Here's a good forum for people trying to find a good bank or learn how to get out of CheckSystems.
- Here is the discussion forum thread that keeps an updated list as well.
ChexSystems for Members
Banks and credit unions can call (800) 328-5120* or (800) 328-5122* to reach ChexSystems' Inquiry Department. At this number, your banker (but not you) can obtain the details in your record immediately.
Tip #1: Your banker can call this number to get all the information in your files and according to FCRA Section 607 (c) regulations, ChexSystems cannot discourage your banker from relaying that information to you.
Tip #2: ChexSystems now offers a customer service number, (800) 513-7125, for consumers to reach a human there. If the wait time on hold at that number is too long, and you REALLY want to speak to a human, sometimes you can ask for a supervisor at either of these 800 numbers and perhaps someone may be able to talk with you. You can also try to game the system by calling customer service, then press the # key, and enter random 3 digit extensions until you find someone on the inside at ChexSystems who will take your call. Either you will find someone this way, or after the third attempt, your call will get forwarded to a human.
Tip #3: Or else, try 1-800-613-6743, (Office of the Controller of the Currency) to file a complaint.
Tip #4: You can also try the customer service number posted on ChexSystem's website: 800.428.9623.
There are 2 other major specialty companies that report on check writing history:
Shared Check Authorization Network (SCAN) maintains a database of returned checks and instances of fraud. It provides check authorization and verification to member retailers.
Toll-free number: (800) 262-7771 (U.S., Guam, and Puerto Rico)
Fax: (800) 358-4506
TeleCheck Maintains a database of returned checks and instances of fraud. It provides check authorization and verification to member retailers.
Toll-free number: (800) 209-8186.
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