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).
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