How ChexSystems works
When you first look at it, it really does sound like a legitimate function. Banks do get defrauded, and they are entitled to take steps to prevent that from happening. ChexSystems purports to maintain a list of people who defraud or are likely to defraud banks.
When most people that are not on the ChexSystems report hear about it, their response is, "well, if you're on the list, you must have done something wrong." Well, it doesn't quite work that way. The "list" is more akin to putting jaywalkers into the same prison cell with murderers. If you got two dollars overdrawn because your paycheck got deposited late, you're in the same category as someone who wilfully wrote a hundred thousand dollars' worth of bad checks. Essentially, here's how it works.
Somewhere between 80 and 90 percent of all banks in the U.S. are ChexSystems banks. They subscribe to this electronic service, and when someone wants to open an account, the bank clerk will check the database to see if you are on it. Although the argument is that the banks themselves make the decision, in almost all cases, they automatically go with the ChexSystems report. If you're on the list, you don't get an account. You stay on the list for five years.
You cannot get out of ChexSystems for five years. There is no such thing as ChexSystems removal, and it is becoming increasingly difficult to find banks not using ChexSystems. They are obligated by the Fair Credit Reporting Act to allow you to add a statement to your report. However, that won't do much good, since when the bank runs your report, they get back only one of two very simple responses: Either "No records found--approve" or "Records found--decline." You must request a paper copy of your ChexSystems file, and take it yourself to the bank manager and present it to him/her and make your appeal.
