Early Warning Services can prevent you from opening a bank account

If you've ever had trouble opening a bank account you're probably familiar with ChexSystems. But have you heard of EWS?

Early Warning Services (EWS) makes it possible for a shared network of member financial institutions to exchange information regarding account openings, transactions, and other banking activities in an effort to combat and prevent fraud.

While ChexSystems maintains a huge database on how bank customers manage their accounts, EWS primarily tracks what they deem as fraudulent activity.

What is Early Warning Services

Early Warning Services (EWS) is a private company that maintains and tracks a large database of consumer banking information including activities like check fraud, bank fraud, forgery, check-kiting, check alteration, counterfeiting and more.

EWS is like a credit bureau for banks that collects and shares information about fraud and suspicious activity in consumer bank accounts.

Who Owns EWS

Early Warning Services is jointly owned by seven of the top largest banks in America:

• Bank of America
• BB&T
• Capital One
• JPMorgan Chase
• PNC Bank
• U.S. Bank
• Wells Fargo

Early Warning Services is also the company behind the popular peer-to-peer mobile payment platform Zelle. Most transactions completed through Zelle are free.

Over 1,000 banks and credit unions are partnered with Zelle that allows users to send money to each other digitally.

How EWS Works

EWS plays a crucial role in fraud prevention and payment solutions within the US financial system with a range of tools to help financial institutions:

• Verify consumer identities
• Detect potential fraudulent activity
• Assess the risk associated with transactions

Banks and Credit Unions Subscribe to use EWS

EWS screens potential bank and credit union customers in a branch and online, sharing information about a potential customer’s risk.

Here are some activities customers are screened for:

• Prior history of fraud
• Account abuse
• Forgery
• Counterfeiting
• Check Alterations
• Paperhanging
• Check Kiting
• Identity verification
• Account owner authentication

If you've ever had difficulty opening a bank account, it's possible information from Early Warning Services played a role in the bank's decision and you may have to rely upon second chance banking or banks that don't use EWS to open a checking account.

What EWS considers as risk transactions

Using your bank account for any kind of fraud is a major red flag. But the problem with a fraud notation is that customers may unintentionally commit fraud, for example:

Let’s say a family member, employer, or even business gives you a check. You deposit that check. If the check bounces, your bank’s risk department may report fraud to Early Warning Systems. Even if you cover the check deposit immediately, the bank can still report fraud to EWS when no fraud was originally intended.

Customer risks could include fraud committed at another financial institution also.

How Early Warning Services Impacts Consumers

Consumers may be prevented from opening a bank account, in-branch or online due to a report in Early Warning Services.

What’s worse, a bank may open an account for you only to close it a week or two later after their loss prevention department screens your new account.

Many times consumers are unaware of any report to EWS and only find out when they are attempting to open a bank account or write a check.

EWS can prevent you from writing a check too. Telecheck may not be the reason your check was denied. Consumers have complained being reported to Early Warning Services for minuscule amounts. Some consumers have paid those small amounts and are still unable to open a bank account or write a check.

EWS is a Consumer Reporting Agency

Early Warning Services is a consumer reporting agency, just like ChexSystems and Telecheck, that means consumers have rights under federal and state laws.

An EWS report can be ordered, free of charge, once every 12 months. You can also order your EWS consumer report any time but it may be subject to a fee.

You are entitled to a free file disclosure if:

• You've been denied services based on your EWS consumer report.
• You are the victim of identity theft and place a fraud alert in your file.
• Your file contains inaccurate information as a result of fraud.
• You are on public assistance.
• You are unemployed but expect to apply for employment within 60 days.

Disputing Items on Your Early Warning Systems Report

Consumers can dispute EWS records just like you can dispute credit report items as well as ChexSystems records. The Fair Credit Reporting Act requires accurate and complete information be reported.

If you find information in your EWS consumer report that you believe is inaccurate or incomplete, dispute EWS records directly with Early Warning Services; or, in the alternative, you can dispute directly with the financial institution that reported the negative information.

EWS is required to correct or remove false information in a consumer’s disclosure file within 30 days of receiving the dispute. Under the FCRA, banks must conduct a reasonable investigation of your dispute.

Negative information can remain in a consumer’s EWS report for up to seven years if they’re accurate and factually correct.