Chexsystems is a consumer reporting agency just like Experian, Transunion and Equifax. This means consumers have the right to dispute any information contained in a ChexSystems Consumer Report.
ChexSystems is subject to the Fair Credit Reporting Act and must investigate any dispute you submit.
They have 30 days to investigate consumer disputes. If the disputed item is not verified by the reporting bank, financial institution or credit union, it must be deleted from your ChexSystems Consumer Report.
You will need your Chexsystems Report in order to initiate disputes and at the end of this article you can find out how to order your Chexsystems Report.
The Dispute Process
Chexsystems has 30 days from the date your dispute is received to conduct an investigation. If you obtained your Chexsystems report by requesting it from t he FACTA Free Annual Report Annual the law extends the dispute response period to 45 days.
Dispute by U.S. Mail
When disputing information in your Chexsystems it is better to write a dispute letter and send it via certified, return receipt U.S. mail. Disputing online makes it more difficult to create a paper trail in case you need it at some later date.
Dispute by Telephone
If you call to dispute an item in Chexsystems or even if you call to ask a question, Chexsystems will try to ascertain as much information about you as possible including your employer and all the banks where you have accounts for the past 5 years.
NEVER give Chexsystems more information than is required for them to access your files. Remember, they are a consumer reporting agency and whatever information they collect only helps them, not you.
Under the Fair Credit Re porting Act the only information needed to confirm identity is your name, current address, date of birth, Social Security number; and, the bank name and account number in dispute. Do not give them a history of your banks accounts for the past 5 years.
Once your dispute request is received Chexsystems must confirm they contacted someone at the financial institution to verify the information in dispute. Verified information remains in your file for up to 5 years. However, Chexsystems must explain how they verified the dispute.
The FCRA gives you the right to know how the dispute was confirmed. Send another certified letter requesting validation of the disputed item. The validation should include the name, address and telephone number of the business or individual who verified the dispute as accurate in addition to your signature on any original documentation from the bank.
Keep a good timeline and all return receipt cards from the post office. If Chexsystems cannot verify how they confirmed your dispute they must delete the item.
If ChexSystems does not respond to your dispute within 30 days from their receipt they must delete the item. You can confirm when ChexSystems received the dispute by checking the green return receipt card you get from the post office.
No response means they could not confirm the item and it must then be removed. Send ChexSystems another certified letter demanding a deletion due to not responding in the time allotted by FCRA Rules.
Dispute with ChexSystems First
You should always dispute with Chexsystems before you take action with the bank. Once you dispute an item, Chexsystems has 30 days to complete the investigation. You might get lucky if the bank does not respond within the 30 day time frame and the dispute item is deleted.
Also, by disputing with Chexsystems first, you create a paper trail in case you need it down the line for legal action. Chexsystems can only report “accurate” information according to the FCRA.
Types of Inaccuracies to Dispute
Since FCRA Rules state you must “accurately” report all negative items, review your Chexsystems report for any inaccurate information you can use to get the item deleted.
- Date the bank reported you to Chexsystems
- Is the item being accurately reported to Chexsystems — Does your file list NSF activity, account abuse, fraud, overdrafts or negative balance.
- Date the bank first notified you the account became negative. When did the bank close the account and report it to Chexsystems. This will help determine when the Statute of Limitations begins. Items can remain in Chexsystems up to 5 years.
- Are you the primary account holder, if not, have you signed a signature card for this account. Request the original copies of your signature card. If Chexsystems cannot provide you with the proof they must delete the item.
- Is Chexsystems reporting personal information such as a name, address and Social Security number accurately.
Any deviation from accurate reporting is a violation of the FCRA and the item must be removed. This also includes clerical errors. Look carefully at your report to find any errors to dispute.
If you are unsuccessful in getting an item removed after disputing with the Chexsystems you can attempt disputing directly with the bank. They are also held to the FCRA Rules when it comes to reporting negative information. And, if you are willing to settle, you should negotiate a pay for deletion. Get the agreement in writing before you send any settlement funds.
Bankruptcy Can Get You Removed
Consumers who have filed bankruptcy can request Chexsystems remove any records in ChexSystems. The bankruptcy does not have to be discharged in order to request removal from ChexSystems. Mail or fax ChexSystems a copy of your bankruptcy confirmation document and request they delete all negative items. Even if the negative items are fraud or account abuse, ChexSystems will remove them if you have filed bankruptcy.
Pay Small Balances and Get Removed
There may be only one item on your ChexSystems report and if this is the case, considering paying the bank directly and follow these steps:
- Pay the amount in full
- Get a proof of payment such as a receipt
- Complete a ChexSystems dispute form or mail a dispute letter
- Dispute on the factual basis of inaccurate reporting and no evidence of debt owed and
- demand a full deletion
Because the FCRA requires only accurate information be reported in consumer reports, once ChexSystems contacts the bank to verify accuracy of the outstanding debt, the bank will be unable to confirm the debt is unpaid.
ChexSystems will have to delete the item because the bank will be unable to provide verification or proof the item is unpaid. Your goal is a deletion, not to have the item updated as “Paid.” Without a full deletion, a paid item is still considered negative.
You want to challenge the accuracy of information reported in ChexSystems; and, once an item is paid directly to the bank, ChexSystems reporting that item is considered inaccurate.
Challenge Fraud Notations
Fraud notations in ChexSystems are very common but also very ambiguous. What type of fraud was committed by the customer, if any. Fraud seems to be a “blanket” notation used by financial institutions so they will not have to detail why a consumer was reported to ChexSystems.
A fraud notation is very serious but can be the easiest to dispute. Dispute the fraud notation and if ChexSystems verifies the notation as accurate, request specific documentation of the alleged fraud. More than likely, the bank will be unable to provide any documentation proving you committed fraud due to the vagueness of this notation.
You may have deposited a check someone gave to you for repayment of a loan and that check bounced. Now the bank accuses you of fraud. How is it determined you intended to fraud the bank when you deposited the check? Banks can rarely prove you purposely intended to commit fraud.
Take Legal Action
Hopefully you will not have to resort to legal action. However, if all efforts to successfully dispute an item have failed this may be the only course of action. Make sure you have created a good paper trail, with copies of all your letters along with the certified return receipts. Your legal action should include proof that you properly notified ChexSystems of the error and they did not correct make a correction.
Another way to clear your Chexsystems report is to make a plea directly to the bank for removal. Many consumers have been successful by just asking. This method works best if you pay or offer to pay the amount in question when requesting removal.
You should be able to show how their failure to correct the error has harmed you in that you are unable to open a checking account and subject to using expensive alternative financial services.
Once a small claims lawsuit is filed you will more than likely get the outcome you are looking for without even going to court. Lawsuits are costly and Chexsystems does not make money by hiring an attorney to litigate. They will probably try to settle and remove the item from your ChexSystems report. Familiarize yourself with FCRA Rules. Each violation of the FCRA is worth $1,000.
Attn: Customer Relations
7805 Hudson Road
Woodbury MN 55125-1403
Order Chexsystems Report
A Chexsystems Report can be ordered online at Chexsystems Consumer Assistance or you can call Chexsystems at (800)513-7125. When ordering a Chexsystems Report only disclose basic information such as name, address, Social Security number and date of birth. You do not have to disclose your current employer or bank account in order to obtain your Chexsystems Report.
Get a Free Chexsystems Report
The Fair and Accurate Credit Transaction Act (FACTA) entitles you to a free Chexsystems report once every 12 months. Go to Chexsystems Consumer Assistance to order your report.