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The Disloyal Opposition

Checks Imbalances 1 | 2 | 3 | 4 | 5 | 6 | 7

Doug (who asked that his last name not be given) was once a high-powered member of the banking industry, serving at both Bank of America and Wells Fargo. Proving that even "insiders" aren't safe, several years ago he was put into ChexSystems after a business deal with a partner went sour, and Doug had to clean up the mess.

• Introduction • One Strike, You're Out • The Paperless Trail • The Disloyal Opposition • Warning Shots • The Starving Class • An Alternative: PassChecking --- • Consumer Complaints about Chexsystems • Consumer Complaints about Certegy

"This company has a very tight stranglehold on the banking industry and consumers at large, without us even knowing about them until it's too late," he said. Now the owner of a wholesale floral business in the Seattle area, Doug looks back on his ChexSystems experiences with dismay.

"As a former banker, when you run someone thru ChexSystems, it either comes back with 'No records found-Approve', or 'Records found-Decline'. So yes, they do tell the banks what to approve and not to approve." Doug had to call ChexSystems several times and was "routed thru a maze of voice prompts, only to never reach any one live. If you do manage to get hold of someone, their customer contact area is in India -- it's another big breach of your personal information."

Stories like Doug's are far from uncommon. The Web is bristling with websites and forums devoted to stories of erroneous listings in Chex, the difficulties endured in trying to get off the listings, and resources for frustrated citizens who don't want to deal with ChexSystems. Sites such as Chexvictims.com , ChexSystemsBites! and ChexHelper.com provide lists of banks and credit unions that do not utilize ChexSystems, forums for sharing tales of woe, and resources for dealing with CRA's.

Witness this post from ChexVictims member "tenaciousE":

"In 2001 I moved from Chicago to a small town in Southern Illinois to take care of my mother for a while. I opened a checking account, and kept the bank account in good standing for a full year. A deposit I made was not honored, which caused an overdraft to my account, for $121.00. I had to wait for two weeks, for my paycheck to cover the overdraft. However, the bank would not wait. Within 10 days they closed my account and reported me to ChexSystems. I received no warning from them nor did they ever tell me what they did. It was only I went to make my deposit that I found out what happened. This was in 2002.

Since this was a small town, there were no currency exchanges. My only option was to cash my paychecks at the grocery store, which charged me a fee…and the bigger the paycheck was, the more they charged me, and I had to pay for money orders to pay my bills. Every bank in that town used ChexSystems, including for the opening of Savings Accounts. The worst feeling in the world is to have a check in your hand that you cannot cash."

Many sites claim solutions to the Chex monopoly. PassChecking.com and NewCheckingAccount.com offer listings of non-ChexSystems banks, plus resources and links for credit counseling, for a one-time processing fee. However, many users who are already in dire financial straits may not be able to afford paying for the list, and in Steve's case, he found the free anti-Chex forums easier to use and more regularly updated.

ChexSystems itself recently implemented an educational course called "Get Checking", in conjunction with the Consumer Credit Counseling Service (CCCS) organization and many participating banks. The course consists of a six-hour tutorial on the basics of checking accounts, using check cards, and so on. The catch? A $50 fee. Doug considered this to be a "conflict of interest". "They put you into ChexSystems, and then you have to pay them to get yourself out of it?"

Other companies have marketed their business as alternatives to ChexSystems. The most widely known is TeleCheck, a subsidiary of the First Data Corporation, based in Greenwood Junction, Colorado. TeleCheck distinguishes itself from ChexSystems mostly due to its focus on the retail and sales industry as opposed to banking, and supposedly due to a TeleCheck victim's ability to get their records removed from the system if all debts are paid and verified.

Another major player in the check verification industry, SCAN, is in fact a partner of ChexSystems, acting as the nation's largest clearinghouse of bounced check records and NSF activity. Given that Chex oversees 80 percent of check processing activity in the United States, and SCAN processes 70 percent of that itself, it would not be unreasonable to call it a "monopoly". Yet, unlike many highly publicized antitrust or anti-monopoly court cases, there has been very little serious outcry against -- or even awareness of-ChexSystems' activity until just recently.

Next: Warning Shots

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