The Consumer Financial Protection Bureau will review how credit unions and banks use reporting agencies to screen members when they open a checking account, according to CFPB Director Richard Cordray’s remarks at an October 8 forum in Washington.  The CFPB is concerned about the accuracy of reports from these databases, whether customers can access and dispute reports, and how they are used overall.  Cordray explained: “A specialty consumer reporting agency associated with checking account screening, in particular, would have a database of information on involuntary closures of checking accounts, check writing, and checking account history.  The reports sold to banks and credit unions can make the difference between a consumer being approved or rejected for a checking account.”

The CFPB zeroed in on three particular areas of concern relative to these checking account reports: (1) the accuracy of the information contained in the reports; (2) consumers’ ability to access the reports and dispute any incorrect information they may find; and (3) the ways in which the reports are being used.

The CFPB is especially interested in learning more about how the checking account screening system could be used to “help institutions better meet the needs of these consumers, rather than simply excluding them from the banking system altogether.”  Cordray clarified that the CFPB will “consider how to balance the needs of banks and credit unions with the needs of consumers for access and protection.  We are seeking, in particular, to explore ways that account screening can move beyond the use of specialized consumer reports as crude ‘black lists’ where consumers are turned down for an account simply because their name appears on the list.”