Citibank has reached an agreement with New York Attorney General Eric Schneiderman to change its screening processes for checking and savings accounts to be more forgiving of customers’ histories, The Wall Street Journal reported yesterday (Jan. 28).
Under the previous arrangement, Schneiderman’s office said, low-income applicants were too often hurt by the more stringent requirements that forced them to turn to high-cost alternative financial services. The new rules, set to take effect on March 15, will change how Citibank uses information from ChexSystems, a database that provides data on how consumers handle deposit accounts at banks. A consumer’s ChexSystems report typically contains banking irregularities such as check overdrafts, unsatisfied balances, depositing fraudulent checks, or suspicious account handling.
“By refining our use of ChexSystems, we will expand access to our products while still promoting responsible finance and maintaining sensible safeguards against fraud and account abuse,” a Citi spokesman said.
Under the agreement, Citibank will only decline applicants if they have two or more reported incidents of abuse in recent years, the total combined loss exceeds $500, and the losses remain unpaid.
Citigroup is now the second financial institution to reach such an agreement, as last June, Capital One Financial Corp. struck a deal to fundamentally change the way it uses ChexSystems to restrict only customers who land in the database for fraud. Similar agreements with additional banks are expected to be reached “in the very near future,” said a spokesman for the office.
