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Wednesday, June 18, 2014

New York State Pushes to Limit Customer Background Screening

Law enforcement scrutiny of bank customer history screening databases is increasing, with New York Attorney General Eric Schneiderman on Monday inking an agreement with a bank to limit its use of a database offered by ChexSystems. Many banks use this and similar databases to review potential customers’ history of fraudulent activity and accounts closed due to bounced checks and overdrafts.

Schneiderman said the agreement is part of an ongoing investigation by his office into large banks’ use of customer history databases. The CFPB also reported that it is reviewing this kind of activity.

ABA expressed caution about limiting use of these databases. ABA SVP Nessa Feddis said:

Just as a credit report helps banks determine whether to issue a loan, checking history databases help banks ensure that customers are offered the kind of financial products that work for them.

Read more.

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