CFPB Examines Screening Process for Consumer DDAs (Oct. 9, 2014)
The CFPB is gathering information about the methods banks and credit unions use to screen consumers before approving or denying them a checking account. The bureau is questioning whether current practices are unfairly blocking consumers from opening accounts. When banks and credit unions screen checking account applicants for risk, they often use reports from consumer reporting agencies, which collect specific types of information on a consumer’s history, such as medical payments, tenancy, employment or insurance claims, explained CFPB Director Richard Cordray, during a forum held by the CFPB yesterday on access to checking accounts.
“The reports sold to banks and credit unions can make the difference between a consumer being approved or rejected for a checking account,” Cordray said in his prepared remarks. “Obviously, then, these reports and the related screening processes of banks and credit unions can greatly affect how consumers are treated.”
Cordray outlined the CFPB’s areas of concern during the forum, which included presentations from consumer groups, federal and local government officials and industry representatives. The bureau is concerned about the accuracy of information in the reports, consumers’ access to these reports and their ability to dispute any incorrect information, and how these reports are being used.
As the bureau investigates the screening practices used for checking accounts, it will consider how to balance the needs of banks and credit unions with the needs of consumers. “The information used to determine [consumers’] eligibility for an account needs to be accurate so that the account screening process does not unfairly restrict their access to the banking system [and] we need to move from screening processes designed to make banks safe from consumers to ones designed to make them safe for consumers.”
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