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October 08, 2014
CFPB eyes checking account screening practices
CFPB held a forum Wednesday for industry stakeholders to discuss practices and concerns related to screening policies used by financial institutions before they approve consumers for checking accounts.
The forum took place in Washington, D.C., and focused on the screening practices employed by financial institutions offering checking accounts. Cordray's remarks were followed by a discussion among industry representatives about screening practices and how to differentiate between consumers who have committed fraud versus those who have had overdrawn accounts.
Helen Godfrey-Smith, president and CEO of the NAFCU-member Shreveport Federal Credit Union, moderated the first panel. She noted that her institution sees very little fraud. "We do know our members … we are closer to our members," she said. Godfrey said the credit union's low-income members value their access to mainstream services.
Cordray said, in his remarks, "We are concerned about whether this information may be imperfect or inconsistent. For example, we know that institutions vary in their abilities to conduct the careful investigations needed to differentiate between accountholders who perpetrate fraud versus those who are victims of fraud. In addition, the definitions used to report an involuntary account closure vary industry-wide on some central points, such as how long a negative balance may go unpaid before it is charged off and the account is closed and reported to the credit reporting agency."
Cordray also talked about the need to allow consumers access to reports so they can dispute incorrect information and cited the danger of shutting consumers out of the banking system.
The forum took place in Washington, D.C., and focused on the screening practices employed by financial institutions offering checking accounts. Cordray's remarks were followed by a discussion among industry representatives about screening practices and how to differentiate between consumers who have committed fraud versus those who have had overdrawn accounts.
Helen Godfrey-Smith, president and CEO of the NAFCU-member Shreveport Federal Credit Union, moderated the first panel. She noted that her institution sees very little fraud. "We do know our members … we are closer to our members," she said. Godfrey said the credit union's low-income members value their access to mainstream services.
Cordray said, in his remarks, "We are concerned about whether this information may be imperfect or inconsistent. For example, we know that institutions vary in their abilities to conduct the careful investigations needed to differentiate between accountholders who perpetrate fraud versus those who are victims of fraud. In addition, the definitions used to report an involuntary account closure vary industry-wide on some central points, such as how long a negative balance may go unpaid before it is charged off and the account is closed and reported to the credit reporting agency."
Cordray also talked about the need to allow consumers access to reports so they can dispute incorrect information and cited the danger of shutting consumers out of the banking system.
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