Most banks don’t even bother to ask what ChexSystems’ record shows. If you’re listed for any reason, you lose. Jane Bryant Quinn, The Washington Post
The denial of an application to open up a checking or savings account at a financial institution is often due to negative data recorded against your name in a database run by the consumer reporting agency ChexSystems, or one of its smaller rivals such as Early Warning System, or TeleCheck. Financial institutions subscribe to the database and share information about clients with less than stellar banking histories. The ChexSystems database is then used by over 80% of U.S. financial institutions to perform risk assessment checks upon customers seeking to open new accounts, of which, approximately 25% adopt a blanket zero-tolerance policy towards negative data stored in the database.
Unless the financial institution that provided information to ChexSystems requests the removal of that information, your information will remain in your ChexSystems report for a period of 5 years.
Anyone who has ever opened a bank account in the U.S. is likely to have a ChexSystems record.Richie Bernardo, Wallet Hub
In many cases, the information relayed to ChexSystems is inaccurate, the result of fraud, or simply incorrect. For example, you may have already paid off a debt which is still marked in the system as ‘unpaid’. Although it is not possible to avoid having your name listed in ChexSystems , you can dispute any errors and restore your good name by having the incorrect information removed.
A study issued by the Federal Trade Commission in 2015 found that approximately 23% of consumers had discovered inaccurate information in their credit reports.
Most ChexSystems reports don’t show how much money was owed. It could be $4 or $40,000. Nor do they routinely show whether the overdraft was repaid.Jane Bryant Quinn, The Washington Post
What are my rights if I choose to dispute information recorded against my name by ChexSystems?
ChexSystems is governed by the Fair Credit Reporting Act and Accurate Credit Transactions Act, which grant you the right to understand what data is being held against you, why, and to dispute the data.
You are entitled to request a free report from ChexSystems once every 12 months, or following a denied application to open a bank within the past 60 days. In the latter case, the bank which turned you down must issue an ‘adverse action’ notice to you, which contains the contact information of the entity which reported you. You can then request a free copy of your ChexSystems report from that company.
In order to successfully dispute information held about you within the database, you need to know precisely what information is contained within your ChexSystems report. Below, you can find a step-by-step guide to the process.
How do I file a dispute with ChexSystems?
The Fair Credit Reporting Act grants you the right to know what information is being held against you, the source of that information and to request proof of the information under dispute in order to validate its accuracy. The proof provided should include the name, telephone number and address of the person or business alleging that the information is true and was accurately recorded.
You can request a free report by clicking on the ‘Free FACTA Report’ link located on the left-hand panel on the ChexSystems homepage, also provided here. As you will see, you can request your ChexSystems report online, or by phone, letter or fax. Follow the instructions on the website in line with your preferred method.
ChexSystems Contact Details
|📠 Fax||📞 Telephone|
|Chex Systems, Inc. Attn: Consumer Relations 7805 Hudson Road, Suite 100 Woodbury, MN 55125||602-659-2197||800-428-9623|
Evaluate your ChexSystems report
The FCRA stipulates that consumer reporting agencies such as ChexSystems must accurately report information disseminated in the financial markets. In order to use this obligation to your advantage, you must carefully analyze the information contained within your report to identify any inaccuracies and/or clerical errors.
You should ask yourself the following questions:
- Has your personal data (e.g. name, social security number, addresses and bank account number) been recorded correctly?
- Have you ever been a client of the bank which recorded information against you?
- Do you recognize the debt recorded against your name?
- Is the amount of the debt recorded against your name accurate?
- Is a paid debt marked as unpaid?
- Are the dates of the alleged mismanagement which led to the information being recorded in the system accurate?
- Could the mismanagement have been the result of identity fraud?
Carefully make a note of every error you discover and search for evidence that can support your claim that the information is incorrect.
Send a formal letter of dispute to ChexSystems
You are advised to raise a dispute with ChexSystems first and not your bank, as you may be lucky and find that ChexSystems is unable to respond to your within the requisite timeframe due to a delayed response from the bank, meaning that by default, even if the information were true, they are required to erase it.
The best contact method is to send a formal written letter of dispute. Ensure that you choose certified mail with a request for a return receipt in order to receive proof of mailing and verification that your letter was successfully delivered. Furthermore, be sure to retain a copy of each letter sent to ChexSystems for your personal files.
Use the form provided by ChexSystems here to file your dispute. You can save and print the document, complete it by hand and then place it inside an envelope with a dispute cover letter on top detailing the reason that you are contacting them and any other documentation you need to provide (such as a photocopy of a document proving your identity) behind it. You can find a dispute cover letter template here.
The ChexSystems form provides space for up to 3 disputed items. Should you have further items to dispute, note this in the cover letter and attach as many forms as you need to in order to comply with their requested form of complaint. If you lack space in the official form, number the documents you wish to enclose and you can elaborate further on each item in your covering letter, referring clearly to each enclosure.
If you choose to include a copy of your ChexSystems report in your letter, you should not enclose the original ChexSystems report in your letter. Only provide a copy to ChexSystems.
Alternatively, you can file your dispute online by using the form in the ChexSystems link here. You can dispute up to 50 items in the online form by selecting the ‘Dispute Another Item’ button towards the bottom of the page.
To submit your dispute to ChexSystems online, simply enter the security code at the bottom of the form, and then click the ‘submit’ button
To fax your dispute to ChexSystems, send the relevant documentation to 602-659-2197.
To mail your dispute to ChexSystems, direct your letter to:
Attn: Consumer Relations
7805 Hudson Road, Suite 100
Woodbury, MN, 55125.
Remember to include the following:
- Relevant information about the disputed information (e.g. account numbers and the names of the banks alleging mismanagement or misconduct)
- A detailed explanation of why recorded information is inaccurate
- Photocopies of documents that support your claims
ChexSystems must respond within 30 days of receipt of your letter/file/call (or 21 days for residents of Maine). Failing that, the disputed information must be removed from your ChexSystems record, irrespective of whether it is accurate or not. Note that if you submit further evidence to support your claim whilst ChexSystems investigation is still ongoing, the investigation period will be extended by a further 15 days. Confirmation of the delivery date and time can be provided by the postal service you chose to use, assuming that you requested a notice of receipt.
Should ChexSystems fail to respond in a timely manner, another letter should then be sent to ChexSystems requesting the removal of the item on the basis that they failed to respond within the timeframe granted by the Fair Credit Reporting Act. You can find a sample letter demanding removal of the information here.
On the other hand, if ChexSystems responds but fails to provide sufficient evidence to corroborate the information in the report, you should respond to them using the template letter here.
In the best case scenario, ChexSystems will provide you with a letter of response confirming the removal of the information from their systems.
However, in the event that ChexSystems notifies you that the bank validated the information contained within the report, you will need to write a letter to your bank. Proceed to the next step for an explanation as to how you should go about doing so.
Send a formal letter of dispute to your bank
Original creditors, such as banks, don’t typically have to validate your debts. They do, however, have to conduct an investigation if you dispute the validity of their reporting method.Let Me Bank
If the information contained within the report is accurate, try to reach a settlement with your bank over the amount due and how this will be repaid (e.g. in installments).
Where you are in a position to dispute the information, you can find a suitable letter template here. Like ChexSystems, the bank has 30 days to conduct its investigation into the disputed information. Due to poor record-keeping practices and the destruction/loss of data whether intentionally, or unintentionally, it is often the case that the bank is unable to provide sufficient evidence.
Should the bank fail to conclude its investigation into the matter and respond to you within 30 days, you have the right to file a lawsuit against the bank for providing information to ChexSystems in the absence of records which validate the accuracy of the report. Proceed to the next step for further information on how to use the threat of legal action to your advantage.
Proceed to take legal action
Taking legal action is not ideal due to the cost involved in hiring a lawyer and the lengthy, unpredictable nature of the process. However, the mere threat of legal action through the filing of a small claims suit may be enough to convince ChexSystems and your bank to remove the negative information after considering the time and cost involved in proceeding to court. There is a small filing fee associated with this, of around $40. Your claim is that ChexSystems/the bank/other financial institution in question have failed to comply with legislation regarding fair reporting from such institutions, notwhether you did or did not rack up the debt in question for example.
What to do in the event of a procedural failure with ChexSystems
If ChexSystems or the bank confirm that the information held in your report is inaccurate/incorrect, but after reviewing your updated report again you note that it was not deleted, you will need to send a Procedural Request Letter which can be found at the bottom of the page here. Both ChexSystems and the bank will have 15 days to re-investigate the issue and confirm that they have updated your records, or they may be liable to investigation by the Federal Trade Commission. You have every right to initiate legal proceedings at this point if they fail to respond after 15 days.
Filing an official complaint with industry regulators
If neither ChexSystems nor the bank provide you with a response within 15 days, you are entitled to file a complaint with one of the following bodies:
- The Consumer Financial Protection Bureau (CFPB)
- The Federal Trade Commission (FTC)
- The National Credit Union Administration (NCUA)
- The Office of the Comptroller of Currency (OCC)
- Your State Attorney General’s Office
- Your State Banking Commission
In addition, you have every right to initiate legal proceedings against either ChexSystems or the relevant bank in a small claims court.
The process involved in removing negative data held against you from the ChexSystems database is a lengthy one. However, perseverance and patience is key to restoring your good name.
Assuming you do not proceed to court for whatever reason, another option available to you is to add a consumer statement to your file. Doing so will alert financial institutions which consider applications from you in future, to the fact that you disputed information held in your file and were unable to reach a resolution with the entities involved.
The statement must be no more than 100 words (or 200 words for Maine residents), must refer directly to the matter being disputed and must not include the names of the affected parties (whether they be people or businesses). To file a consumer statement, click on the ‘Request for Consumer Statement form’ link on the ChexSystems website here for the form.