Consumers should consider using the dispute process when Bank of America reports account abuse to ChexSystems because account abuse is often due to overdrafts caused by the bank re-ordering transactions.
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, BofA should be removed from ChexSystems. If I’m correct who would I need to contact about this?
Bank of America reports account abuse to ChexSystems
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 the bank, the bank can verify that the reported information is accurate or correct the information to make it accurate.
Bank of America does not have to delete information; they can simply update as to what they say is accurate. Once Bank of America reports account abuse to ChexSystems it becomes the updated, verified reason you have a ChexSystems record.
ChexSystems dispute extended past 30 days
The FCRA requires consumer reporting agencies and original creditors to conclude dispute investigations within 30 days, but keep in mind, they have 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 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 they do 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 the time periods.
Where to make complaints about ChexSystems
The next step to remove erroneous or 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.
Problems with ChexSystems Account Abuse Notations
“Abuse” or “Fraud” is so often reported to ChexSystems when account holders had no intention on 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 overdrafts which were caused by the bank itself. All too often banks reorder transactions in various ways that can lead to overdraft fees. For example:
You have $300 in your account, with transactions of $90, $65, $145 and $300 all coming through on the same day, in that order. That’s a total of $600; and clearly not enough funds to cover all the transaction. Now, if the $90, $65 and $145 transaction clear first, your balance will be $0. But, what if the bank re-orders the transactions so that the $300 transaction hits first, immediately your account is hit with multiple overdraft fees when the remaining three transactions ($90, $65 and $145) come through. The bank could have paid the 3 smaller amounts first, that way the only overdraft would be the $300 transaction.
These overdrafts may have added fees depending on how long you keep the account in overdraft status. However, while a mistake was made with your account, you did not intentionally commit “account abuse” but Bank of America reports account abuse to ChexSystems.
Dispute when Bank of America reports account abuse to ChexSystems
Bank of America, as with any other bank, does not 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.
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.
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. But because ChexSystems records can remain up to 5 years, you may need to find a Second Chance Bank or a Bank that does not use ChexSystems if you are currently unbanked or using a prepaid debit card only.
Even if you have a bank account, anytime you are in ChexSystems or EWS, you run the risk of account closure or account freeze. It’s a good idea to always keep a checking account at a bank that does not use ChexSystems like BBVA. They offer a free checking account with a visa debit card, mobile and online banking, bill pay, unlimited checking writing and free ATMs at BBVA and 55,000 Allpoint ATMs nationwide. You can open a BBVA ClearConnect checking account online for $25.