If you thought the credit bureaus were invasive of your privacy, you
don’t want to read about the latest bureau to appear, and it’s been
around for several years.
You know how someone watches everything you do when it comes to your
credit cards and use of other credit items? Well, there are
organizations out there that are watching all of your bounced and
returned checks and those other overdrafts created by your debit and
ATM card use.
If you have late payments on your credit cards you are subject to
higher rates of interest and possible closing of the account. In the
same way too many bounced checks and overdraft charges will cause
banks and credit unions to close your bank account.
I know many of you are saying to yourself: “Self, why not just go
another bank or credit union and open another account?” The answer is
– the other institution already knows about your history of rubber
checks and closed accounts. Once again you’re talking to yourself:
“How?”
With names like ChexSystems and Telecheck you can figure out who is
watching you and your checks. These companies do such things as offer
check approval, guarantee and verification to banks, retailers,
credit unions and other companies who accept checks as payment. These
stores and banks then decide if they will accept your check or allow
you to open a new account with them.
Just as negative information can stay on your credit report for
seven years, you can be blacklisted by negative check information for
five years. Unless you are aware of this bureau, even negative
information from fraud or identity theft will stay on record hurting
your checking reputation.
The Fair and Accurate Credit Transactions Act (FACTA) regulate
companies providing services such as closed-for-cause accounts and
other information collecting services in much the same way as credit
reporting bureaus. Despite these regulations subjecting ChexSystems
and similar companies to the same disclosure and reporting
requirements as credit reporting agencies, many consumers are
completely unaware about these check approval systems.
In this case, ignorance is not bliss because most consumers don’t
know to monitor their records on these check approval systems. If
mistakes or fraud in your report have been the cause of your checks
being refused in the past, you will likely have trouble clearing your
name.
TeleCheck to screen new account applicants.
A major reason is income generation – checking accounts don’t
generate much income and if too many criminals open checking accounts
with an institution, their exposure to fraud is greatly increased. So
it is in the best interest of the bank to err on the side of caution
and refuse to open a new checking account if you have negative
information on your report. The thinking goes like this: It is better
to turn away 1 legitimate customer who’s report is marred by identity
theft, than to open an account for a fraudster who’ll bounce checks
and bilk the bank out of thousands of dollars. In 2002 alone banks
lost an estimated $1.6 billion and $15 billion by merchants due to
bad checks.
Most of the companies will help you correct errors in your listings,
even helping correct things with the bank and removing your name from
their database. Go to the companies Web site or the 800-telephone
number and request a report. Depending on the state of residence,
your report will cost between $0 and $8.
Unlike your credit history report, there will be a file with
ChexSystems and these companies only if there is negative
information. In this case, no news is good news. Two examples of
negative information would be bounced checks and apartment evictions.
Unless you check your report yourself, you will not learn about this
negative file until a check is denied acceptance at the checkout
stand.
If and when you find errors in your file, you must contact the
report generating company on the Internet or write a letter of
dispute. You need to have it investigated and receive a written
report on their findings. You must also report the fraudulent use of
checks when you have been the victim of check forgery resulting in
non-sufficient funds (NSF) activity on any checking/share draft
account(s).
ChexSystems
http://www.chexhelp.com
1-800-428-9623
SCAN
http://www.scanassist.com
1-800-262-7771
TeleCheck
http://www.telecheck.com
1-800-710-9898