CFPB Cites Bank for Checking Account Reporting Issues

08/11/17 – The Consumer Financial Protection Bureau (CFPB) took action against a large national bank for issues related to information it provides for checking account screening reports.

The bank is a national bank based in Columbus, Ohio that provides a variety of consumer financial services and, among other things, furnishes information about its checking accounts to nationwide specialty consumer reporting companies.

These specialty consumer reporting companes collect and report negative information about consumer checking accounts, such as whether an account was closed due to an unpaid negative balance or due to suspected fraudulent activity. Banks then screen potential customers based on reports created by the specialty consumer reporting companies about the customer’s prior checking account behavior .

Banks that supply information for those reports are required to have proper processes in place for reporting accurate information. According to the CFPB, the bank did not have these processes in place and did not keep consumers informed about the results of their reporting disputes and key aspects of their checking account application denials.

Specifically, the Bureau alleged that the bank violated the Fair Credit Report Act because the bank:

• Failed to have adequate processes for accurately reporting checking account information.
• Did not keep consumers informed about the status of their disputes regarding potentially inaccurate information on their consumer reports.
• Did not supply consumers who were denied checking accounts key information regarding the denial. Banks are required to provide consumers the name and contact information of the consumer reporting company that supplied any information that the bank used to deny a consumer’s checking account application. The CFPB found that the bank’s notices failed to provide this information.

The Bureau is ordering the bank to pay a $4.6 million penalty.

CFPB Press Release; Consent Order.