Fraud notations in ChexSystems are very common but also very ambiguous. What type of fraud was committed by the customer, if any.
Fraud seems to be a “blanket” notation used by financial institutions so they will not have to detail why a consumer was reported to ChexSystems.
A fraud notation is very serious but can be the easiest to dispute.
How to Dispute ChexSystems Fraud Notation
ChexSystems is a consumer reporting agency which means they are governed by the Fair Credit Reporting Act. ChexSystems has 30 days in which to investigate a dispute. If the dispute is not verified by the bank which reported the fraud notation, it must be removed.
1. Dispute directly with ChexSystems. Dispute the fraud notation and if ChexSystems verifies the notation as accurate, request specific documentation of the alleged fraud. More than likely, the bank will be unable to provide any documentation proving you committed fraud due to the vagueness of this notation. You may have deposited a check someone gave to you for repayment of a loan and that check bounced. Now the bank accuses you of fraud. How is it determined you intended to fraud the bank when you deposited the check? Banks can rarely prove you purposely intended to commit fraud.
2. Dispute directly with the bank. Under the FACT Act, you can also dispute directly with the furnisher of information, meaning the bank. They are under the same 30-day timeframe in which to investigate the dispute or delete it from your ChexSystems report. But before you do this I suggest disputing with ChexSystems first, the item may be removed with that dispute and if so, your work is done.
Fraud is a very serious notation in ChexSystems and negative information in ChexSystems can remain 5 years. Banks often make vague and ambiguous notations such as “fraud” or “account abuse” in consumer’s ChexSystems reports. If you did nothing illegal, request the bank prove and justify their fraud notation.
3. File a Complaint with the OCC. The Office of the Comptroller of the Currency supervises all national banks and federal savings associations. The OCC can help resolve issues with your bank. In some instances, they may refer your complaint to the Consumer Financial Protection Bureau which also handles complaints against banks.
If you have documentation or can support your complaint with facts make an online consumer complaint with the OCC. You will discover the OCC process moves quickly and efficiently. Banks do not like it when complaints are made to the OCC. You may find the issue resolved, in your favor, with little effort.
4. Other governmental agencies for complaints.
- For a problem with a state-chartered bank and trust company, contact either the Federal Deposit Insurance Corporation or state banking authority.
- To file a complaint about a federally chartered credit union, contact the National Credit Union Administration.
- For a problem with a state-chartered bank that is a member of the Federal Reserve System, contact the Federal Reserve System.
More ChexSystems Resources
- Banks That Don’t Use ChexSystems – Take a look at our list of banks that do not use ChexSystems for a new checking account.
- EWS (Early Warning Services) – EWS is similar to ChexSystems and can prevent you from opening a checking account.
- Check your ChexSystems Report – Unsure what information exists in your ChexSystems report? Learn how to find out.
- ChexSystems Scores – Did you know that you have a ChexSystems score similar to a credit score? Find out how to get yours.
- How to Get Out of ChexSystems – Learn how to get out of ChexSystems in four simple steps.
- Account Abuse – Find out why ChexSystems often reports customers for account abuse with no real explanation of what that notation means.
- Second Chance Banking – Take control of your financial future with our list of the 10 best banks that offer second chance checking accounts.