Checks Imbalances1 | 2 | 3 | 4 | 5 | 6 | 7
At the heart of the struggle with ChexSystems is the right of every American to have a financial future. There's no question that banks can and should take all necessary precautions to prevent data loss, identity theft, and fraud abuse.
Nor is the consumer's responsibility to practice good banking habits out of the equation. Not to mention the concept of banks turning away potential customers who they could introduce to their products and gain as valued clients. Why lock so much potential profit out of the system?
The answer lies in what kind of client financial institutions are pursuing for membership. In his opening statement at the ChexSystems hearings, Senator Florez very explicitly discussed the fear of what happens to the "unbanked families:"
"[T]he Federal Reserve reports that the unbanked are disproportionately found among lower income households, African-American and Hispanic households, and households headed by young adultsmany of these unbanked families rely heavily on check cashing outlets and payday and title lenders for financial services and this greatly limits their ability to save, build wealth, and participate within the regular financial system of our banks and credit unions. "
Several articles on ChexSystems confirm the notion of banks discreetly discriminating against less-profitable clients. A Bankrate.com article discussed the desires of major banking institutions to use CRM (Customer Rights Management) software to "weed out" unprofitable clients and woo richer ones to their suite of banking products. The NCRC report confirmed that many banks practice disenfranchisement through "benign neglect," and Jane Bryant Quinn's article wondered if banks were deliberately targeting "little-guy" accounts.
So what can be done? The NCRC report recommended shortening the time spent on a ChexSystems report from five years to three, and to employ more sources of data to verify a customer's reliability and history before approving or denying them. Senator Florez' hearings recommended "parallel tracking", where dual records of mistaken NSF activity and actual fraud are maintained, as opposed to lumping every overdrafted check into the same system. Some major banks, including Bank of America, agreed to pursue these recommendationsat least for a time. But one need look no farther than the words of Rahul Gupta, eFunds' senior vice-president, in a press statement regarding their partnership with Fiserv:
"This is a partnership of two market leaders delivering unmatched technology and services to the [financial institution] market enabling FIs to improve customer service and open more profitable consumer checking accounts, while driving down costs," concluded Gupta. (Emphasis added)
Doug and Steve, and many people like them, aren't habitual criminals or check bouncers. They made some dumb mistakes, or were innocent victims of others' mistakes. Yet they've been condemned to a "second-class status" of citizen, locked out of the options most of us never think twice about.
Whether it's from benign neglect or obsession with the profit margin, ChexSystems frees banks to dismiss any customer without explanation or discussion, and to focus on what will bring in the bucks for the bottom line. As Steve put it, "With Chexsystems you are guilty until proven innocent, and many people struggle just to get their paychecks cashed everyday because of this company."
Until more oversight is directed towards this monopoly on banking rights, the rights of Americans to earn, save, and invest their money will continue to suffer a serious imbalance, with no checks -- or Chex -- to level the playing field.