What happens if Bank of America reports account abuse to ChexSystems


If you’re wondering “Does Bank of America Use ChexSystems” – Yes, they use ChexSystems along with Early Warning Services (EWS) to verify new accounts.

Consumers that have been reported to ChexSystems by Bank of America for “account abuse” should consider using the ChexSystems dispute process to remove the negative reporting.

Often times excessive overdrafts can lead to banks reporting account abuse. But that does not mean a customer intentionally committed account abuse.

Here is a question by a Bank of America customer that was reported to ChexSystems for “account abuse” after first being reported to ChexSystems for “suspected fraud.”

Question: Bank of America first reported fraud to ChexSystems and I disputed it. They did not respond within 30 days but instead of removing me from check systems Bank of America changed it from fraud to account abuse. Can they do that? Since they did not respond, Bank of America should have been removed from my ChexSystems report. If I’m correct who would I need to contact about this?

What happens when Bank of America reports account abuse to ChexSystems

When Bank of America reports a customer to ChexSystems for “account abuse,” it’s often vague as to what exactly occurred as there are no clear standards for what is considered account abuse. Account abuse can mean whatever the reporting bank wants it to mean at the time.

That’s likely why Bank of America simply changed the original ChexSystems report from “suspected fraud” to “account abuse.” The negative notation can remain on your ChexSystems report for 5 years. That’s why it’s important to exercise your right to dispute inaccurate ChexSystems reports.

ChexSystems has to follow the rules of the Fair Credit Reporting Act. When you initiate a dispute, the investigation must reach a determination as to the accuracy of the disputed information. Once the investigation is sent by ChexSystems to Bank of America, the bank can verify the account abuse notation as accurate, correct the information to make it accurate, or delete the notation.

But Bank of America does not have to delete the notation on ChexSystems – they can simply update the notation as to what they say is currently accurate or verify the current notation is accurate.

How to Dispute when Bank of America reports account abuse

Bank of America, as with any other bank, doesn’t always get it right. You can dispute any inaccurate information reported to your ChexSystems files directly with the bank that reported you. If you have supporting documentation as to why you did not commit account abuse, submit that with your dispute. Having an identifiable bank error or some type of legal violation gives you leverage to get removed from ChexSystems.

Bank of America is under the same requirements as ChexSystems to conduct an investigation within 30 days to either verify, correct, or delete the information reported to ChexSystems The purpose is that you are sending an official legal challenge to the bank asking them to investigate and confirm in writing what they reported to ChexSystems.

How long does it take to dispute ChexSystems? 

The Fair Credit Reporting Act requires consumer reporting agencies and original creditors to conclude dispute investigations within 30 days. But ChexSystems has an additional 5 business days thereafter to send dispute results.

If the consumer sends additional information during the dispute investigation period, the consumer reporting agency (ChexSystems) may extend the dispute period an additional 15 days. Plus, if you dispute based on the information you received via the “free annual disclosure,” ChexSystems has 45 days after the date on which the dispute is received to complete the investigation.

If ChexSystems does not comply with the time periods, they are in violation. You can file a complaint with the Consumer Financial Protection Bureau if you think a violation has occurred concerning dispute investigation time periods.

Problems with ChexSystems Account Abuse Notations

“Abuse” or “Fraud” is so often reported to ChexSystems when account holders had no intention of committing abuse or fraud. Unfortunately, there is no standardized or clear definitions of account abuse or account fraud when it comes to banks reporting consumers to ChexSystems or to EWS for fraud.

In fact, ChexSystems account abuse may involve actions a customer had no control over. For example:

  • A family member owes you money and repays you with a check. If the check bounces the bank can consider that fraud and report you to ChexSystems.
  • An elderly person could unknowingly be part of a scam targeted at senior citizens. The scam could involve the senior citizen depositing a fake cashier’s check into her account on behalf of a third party that promised a kick-back for cashing the cashier’s check. No matter how long the senior citizen has maintained good standing accounts and regardless of whether there are enough funds in a savings or investment account to cover the fake cashier’s check, the bank could report fraud to ChexSystems.
  • Your employer could put a stop payment on a paper check you normally deposit on paydays. The bank may consider that fraud when you had no idea a stop payment was placed.

Where to make complaints about ChexSystems

The next step to remove inaccurate information is to file formal complaints with the Consumer Financial Protection Bureau (CFPB); your State’s bank regulator’s office, the Office of the Comptroller (even though the OCC may refer you to the CFPB), and the National Credit Union Administration (NCUA) if you bank at a credit union.

Alternative strategy to get removed from ChexSystems

If you don’t think there’s enough leverage or documentation to successfully challenge the bank, consider negotiating a pay for delete transaction with the bank. It’s very possible that Bank of America can delete the ChexSystems notation in exchange for payment. In fact, the older the ChexSystems notation, the greater opportunity you have at settling the debt for less, as long as the bank has not sold the debt to a collection agency.

Why Does Bank of America Use ChexSystems?

Just like other banks, Bank of America uses ChexSystems when someone applies for a bank account to minimize risk. According to the National Consumer Law Center, over 80% of banks use a checking account reporting company like ChexSystems, Early Warning Services, Certegy, and Telecheck to evaluate whether to approve customers for a new account.

Banks are looking to reduce liability and risk from people with poor banking habits.

The fact that Bank of America uses ChexSystems and EWS to verify new accounts, does not mean you will automatically be denied a new account. Bank of America offers several different checking accounts:

  • Advantage SafeBalance Account
  • Advantage Plus Account
  • Advantage Relationship Account

Bank of America’s Advantage SafeBalance Account is a type of second chance account because it helps you stay within your balance to avoid overdrafts, overspending, and doesn’t allow check writing. Plus, if you need a checking account for bad credit, the SafeBalance account can help you get back on track.

ChexSystems record can remain up to 5 years

Without some type of leverage like a reporting inaccuracy, FCRA violation or pay for delete negotiation, ChexSystems records are difficult to delete. Because ChexSystems records can remain up to 5 years, you may need to find a bank that does not use ChexSystems if you are currently unbanked or using a prepaid debit card only.

You have a right to freeze ChexSystems reports but that does not remove negative records. With a ChexSystems freeze When you put a freeze on your ChexSystems report they will not release any information in your consumer file without your expressed authorization.

Banks and credit unions that use ChexSystems will receive a message indicating that you have blocked your information. At that point a bank can simply deny opening a new account for you. Or, the bank could pull an Early Warning Services report to determine approval.


1 thought on “What happens if Bank of America reports account abuse to ChexSystems”

  1. This happened to me because I had too much money going through my account. It is not fair or equitable that BOA can cause this kind of stress to a person for five years with no recourse. There is a day of reckoning for the people behind this kind of abuse.

Leave a Reply

Your email address will not be published. Required fields are marked *