Today, the CFPB held a forum to learn more about how consumers are impacted by checking account screening policies and procedures. The CFPB recognizes that checking accounts are one of the most widely used financial products by consumers, but the CFPB has expressed concerns that screening practices may be preventing consumers from gaining access to basic checking accounts. During the forum, the CFPB heard presentations from consumer groups, federal and local government officials, and industry representatives on the following topics:

  • The Account Screening Information Ecosystem and Financial Institution Screening Practices
  • Consumer Experiences
  • Improving Information and Access for Consumers

According to the CFPB, many banks and credit unions rely on reports provided by specialty consumer reporting agencies (CRAs) to determine whether to open a checking account for new customers. CRAs that specialize in checking account screening commonly provide banks and credit unions with information about a consumer’s check writing and account history, including whether a consumer has had a previous account closed and whether the consumer has a record of bounced or returned checks and overdrafts. In addition to these specialty reports, banks and credit unions may also screen consumers to determine if they pose a credit risk when deciding whether to open a consumer checking account.

In prepared remarks, CFPB Director Richard Cordray stated that, “The Consumer Bureau has three areas of concern. First, we are concerned about the information accuracy of these reports. Second, we are concerned about people’s ability to access these reports and dispute any incorrect information they may find. Third, we are concerned about the ways in which these reports are being used.”

The CFPB identified the following potential next steps to improve checking account screening policies and practices:

  • Increase the accuracy of data furnished to and reported by consumer reporting agencies;
  • Identify how institutions can use various screening tools to manage risk without unnecessarily excluding potential accountholders;
  • Inform consumers about their rights to review their account histories and correct any inaccuracies; and
  • Inform consumers about how they can access different account products that meet their needs.

Director Cordray also noted that, “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. We envision a process that better understands consumers’ needs and can provide an account that is appropriate to their personal circumstances.”