ChexSystems is one of several nationwide specialty consumer-reporting agencies (NSCRA) that reports consumers’ checking account behavior. Unfortunately, ChexSystems account abuse is one of two major categories, ChexSystems over-uses to categorize negative checking account activity.
What is ChexSystems Account Abuse?
ChexSystems account abuse occurs when a bank customer fails to comply with terms in their deposit account agreement. Here are several examples of ChexSystems account abuse:
- Unpaid overdrafts
- Unpaid fees
- Any banking account closures
- Debit or ATM card abuse
- ATM abuse
- Excessive Non-Sufficient Funds (NSF) activity
- Checking account regularly being overdrawn
- Length of consecutive days overdrawn
- Checks you deposit that are returned
While ChexSystems account abuse sounds awful, that notation is in no way as damaging as a ChexSystems suspected fraud notation.
Unless you choose from banks with no ChexSystems it will be difficult to open a new checking account with a “suspected fraud” notation on your ChexSystems report.
How to remove account abuse from ChexSystems?
One of the most common ways to remove ChexSystems account abuse notations is through the dispute process if your ChexSystems report contains errors or is inaccurate.
Here are more options to remove account abuse from ChexSystems:
- Dispute directly with the bank or credit union that reported you. Under the Fair Credit Reporting Act (FCRA), banks must to conduct and complete an investigation within 30 days once they receive your dispute. The bank is required to provide you with a notice detailing the results of its investigation. If the bank fails to respond within the 30-day time period, they must remove the account abuse notation.
- If the notation is accurate consider paying what is owed and requesting the bank remove the record from your ChexSystems report.
- Contact the banking regulator in your state. They typically have online complaint forms to help consumers resolve issues. Find your state banking regulator here.
- Federal financial institution regulators like the Office of the Comptroller of the Currency manage complaints about commercial banks having the word “Federal” or “National” or using the title “N.A.” (National Association) in their title.
- The National Credit Union Administration manages complaints about federally-regulated credit unions
- It’s likely that your complaint is governed by the Consumer Financial Protection Bureau’s regulatory authority also.
- If efforts to remove ChexSystems notations, you may have to wait it out. ChexSystems will remove the account notation reaches 5 years from the report date
How to avoid getting flagged for ChexSystems account abuse?
It’s important to regularly monitor your checking account. Balancing debits and ensuring you have enough funds to cover transactions will often help avoid getting your account flagged.
Here are a few more tips to maintain a checking account in good standing:
Communicate with your bank. Work with the bank when overdrafts or return items occur.
Practice relationship banking. If you have a local bank branch, get to know the branch managers. They often the authority and latitude to override the bank’s policies.
Overdraft protection for a fee. Overdraft protection is an optional service that banks offer in order to help protect customers from having their checks, ATM transactions, or debit-card purchases rejected due to insufficient funds. This service typically comes with a fee.
Free overdraft protection. Chime offers a checking account that will spot you up to $200¹ on debit card purchases and cash withdrawals with no overdraft fees. SoFi Bank also allows customers to overdraft their checking accounts up to $50 with no charge.
