US Bank adverse action
Jul 29, 2014, 11:45 pm
#47
Join Date: Mar 2005
Location: ATL
Programs: AA, AGR, DL, MR, WoH, UA
Posts: 951
I was speaking with my banker the other day. He told me that my checking account was flagged shortly after I opened it.
Turns out the test deposits and withdrawals from setting it up for transfers with other institutions was the cause.
Alarmingly, the person at the branch whose job it is to manually review flagged accounts did not recognise the pattern. My banker had to intervene and explain it to him.
So, build a good relationship with your banker?
Turns out the test deposits and withdrawals from setting it up for transfers with other institutions was the cause.
Alarmingly, the person at the branch whose job it is to manually review flagged accounts did not recognise the pattern. My banker had to intervene and explain it to him.
So, build a good relationship with your banker?
Jul 30, 2014, 5:25 am
#48
Join Date: Nov 2013
Posts: 572
Chex Systems
The big banks tend to be pretty risk-averse when it comes to deposit accounts and don't really care if they have to fire a bunch of innocent customers along the way. It's like a rental car company choosing not to rent to someone under 25 even if they have a good driving record. Someone running large amounts of money through their account, especially relative to their average balance, is a much greater risk to the bank than the average person who gets their paycheck direct deposited and pays bills, plain and simple.
I'd try a small community bank or credit union, be frank with them about your plans for the account, and take your business somewhere else if they don't like it. Every financial institution is different, but you should be able to find one that is willing to work with you. Smaller financial institutions tend to know their customers a lot better, so they have more ability to take a closer look instead of just shooting first and asking questions later. I don't know why anyone uses the big banks for deposit accounts honestly. Both the deals available and the customer service seem to be much worse than at the average small community bank or CU. And they often/usually rebate other banks' ATM fees, so you actually have easier access to cash.
As far as I know banks generally don't report to Chex unless you owe them money. If they just didn't want to do business with you anymore, the form letters they send to tell you the account is being closed will warn that you may be reported to Chex/EWS, but everyone I have talked to who had a checking account closed for MS-type activities who then checked their Chex report (free once a year) saw nothing reported there. They can't report you to Chex for depositing too many MO, or withdrawing it too rapidly after they make it available, and something like suspected fraud would be way over the top without any evidence to support it. The worst consequence would be if any ACH payments or checks bounced and caused adverse action from other banks. Luckily when a payment is returned there is a code that gives the payee the reason, so they will know it wasn't because of NSF but because the bank froze your account, so a phone call to explain followed by prompt payment from another account is likely to clear things up if you are an otherwise good customer.
If anyone has a counterexample of someone who was actually reported to Chex for MO deposits without owing the bank money, I'd be very interested to hear about it. I'm not a lawyer, but I'd think that reporting to Chex in this situation would cause the bank all kinds of legal issues. If they report something false to Chex, refuse to correct it if the customer disputes it under FCRA, and as a result the customer can't open a checking account, it seems like the customer would have a good libel case. Seems like it's in the banks' interest to only report solid facts to Chex and not mere suspicion based on a customer's pattern of transactions looking similar to customers who caused the bank problems in the past. If they are not sure if you are a risk or not, and they don't really need your deposits, it might be a wise business decision to axe you, but that same risk aversion would discourage risking lawsuits and regulatory complaints. What if they thought there was a 10% chance you were engaged in some kind of fraud that could cause them a big loss? It might be an easy decision to close that account if they aren't making much money on checking accounts anyway, but I can't see how they could go around reporting people their risk model said had a 10% chance of defrauding the bank to Chex.
I'd try a small community bank or credit union, be frank with them about your plans for the account, and take your business somewhere else if they don't like it. Every financial institution is different, but you should be able to find one that is willing to work with you. Smaller financial institutions tend to know their customers a lot better, so they have more ability to take a closer look instead of just shooting first and asking questions later. I don't know why anyone uses the big banks for deposit accounts honestly. Both the deals available and the customer service seem to be much worse than at the average small community bank or CU. And they often/usually rebate other banks' ATM fees, so you actually have easier access to cash.
As far as I know banks generally don't report to Chex unless you owe them money. If they just didn't want to do business with you anymore, the form letters they send to tell you the account is being closed will warn that you may be reported to Chex/EWS, but everyone I have talked to who had a checking account closed for MS-type activities who then checked their Chex report (free once a year) saw nothing reported there. They can't report you to Chex for depositing too many MO, or withdrawing it too rapidly after they make it available, and something like suspected fraud would be way over the top without any evidence to support it. The worst consequence would be if any ACH payments or checks bounced and caused adverse action from other banks. Luckily when a payment is returned there is a code that gives the payee the reason, so they will know it wasn't because of NSF but because the bank froze your account, so a phone call to explain followed by prompt payment from another account is likely to clear things up if you are an otherwise good customer.
If anyone has a counterexample of someone who was actually reported to Chex for MO deposits without owing the bank money, I'd be very interested to hear about it. I'm not a lawyer, but I'd think that reporting to Chex in this situation would cause the bank all kinds of legal issues. If they report something false to Chex, refuse to correct it if the customer disputes it under FCRA, and as a result the customer can't open a checking account, it seems like the customer would have a good libel case. Seems like it's in the banks' interest to only report solid facts to Chex and not mere suspicion based on a customer's pattern of transactions looking similar to customers who caused the bank problems in the past. If they are not sure if you are a risk or not, and they don't really need your deposits, it might be a wise business decision to axe you, but that same risk aversion would discourage risking lawsuits and regulatory complaints. What if they thought there was a 10% chance you were engaged in some kind of fraud that could cause them a big loss? It might be an easy decision to close that account if they aren't making much money on checking accounts anyway, but I can't see how they could go around reporting people their risk model said had a 10% chance of defrauding the bank to Chex.
Jul 30, 2014, 7:41 pm
#49
Join Date: Mar 2014
Location: Florida
Posts: 274
A few years ago Chase has closed my checking account for depositing US mint coins ($5K a week) and reported to Chex systems "Account closed for suspicious/fraudulent activities". The report was there for about a year! I was unable to open another account at any bank or CU. My business suffered and it affected my personal life too. I had to file a lawsuit against Chase to have the negative report removed. Can tell you it was a tough year without a bank account and I would never want to go through this again.
Jul 31, 2014, 6:32 am
#50
Join Date: Oct 2009
Location: Land of the parrots and parrotheads
Programs: Several dozen
Posts: 4,820
New bank accts only. Affected only if the institution pulls a CHEX report (not all do). The takeaway is to always have excellent relationships with your banksters and accounts with different institutions. Presently 4 CUs and 3 banks is what I use, although in the days of the coin I used a total of 12 banks and CUs. Your government preaches diversity is good and indeed it is in the MS biz.
Jul 31, 2014, 6:56 am
#51
Join Date: Nov 2013
Posts: 572
I guess if I didn't apply for the business checking account at WF I would be fine and WF would never find out. But I wouldn't find out either because I don't check my Chex System report. Ever.
Aug 7, 2014, 12:30 pm
#53
Join Date: Dec 2004
Posts: 7,905
Aug 8, 2014, 1:44 am
#55
Original Poster
Join Date: Jan 2013
Posts: 322
My CCs are still active. I'm waiting for my termination letter in the mail, hoping that it it never comes.
Dec 15, 2014, 5:40 am
#59
Join Date: Oct 2009
Location: Land of the parrots and parrotheads
Programs: Several dozen
Posts: 4,820
Never leave a ton of points in a proprietary bank award program. That is just asking for trouble.
Dec 25, 2014, 9:41 am
#60
Join Date: Nov 2009
Posts: 1,060
All my US Bank cards got shut down, merry f***ing christmas to me. I have no checking account, so my guess is with MSpend.
Out of curiosity, for those who got the short end of the stick, are we banned from US Bank? Has anyone tried to negotiate with their fraud team to reinstate the account? How about applying for the same cards a few months down the road?
We can take this to PM if it's sensitive information. Thanks!
Out of curiosity, for those who got the short end of the stick, are we banned from US Bank? Has anyone tried to negotiate with their fraud team to reinstate the account? How about applying for the same cards a few months down the road?
We can take this to PM if it's sensitive information. Thanks!