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Forum on access to checking accounts

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Today, we held a forum on access to checking accounts in Washington, D.C. The live event has now ended. The event featured remarks from Director Richard Cordray, as well as presentations from consumer groups, federal and local government officials, and industry representatives. We aim to learn more about how the screening system works and how to improve the information and products that are available for consumers.

A recording of the forum will be available here soon.

Access to checking is important

Many people view checking accounts as an important step towards financial stability and economic mobility– particularly for low-income and economically vulnerable households. However, more than ten million households in America are unbanked , meaning they do not currently have a checking account.

Checking accounts provide: a secure way for consumers to:

  • deposit their paychecks,
  • make payments,
  • transfer and hold money, and
  • manage household finances.

Checking accounts can also be an entryway to other financial services like savings accounts and credit products. This can ultimately enable access to longer term financial goals such as auto-and home ownership. Checking accounts often enhance financial capability, upward mobility, and the building of wealth.

Although new financial service products, such as prepaid cards, are becoming more popular and affordable, checking accounts typically offer more features and payment options. As a result, households without checking accounts often spend more time and money managing household finances and meeting day to day obligations than those with checking accounts.

Consumers who struggle to pay their bills each month or who have problems managing their checking accounts risk overdrawing them. This frequently results in stiff penalties. We found that the median overdraft fee was $34 in 2012. Overdraft and non-sufficient funds (NSF) fees account for the majority of checking account fees charged to consumers. These fees quickly add up and consumers who are unable or unwilling to repay what they owe end up losing their accounts. This can have serious consequences for consumers, affecting their ability to open a new checking account for several years. While some accounts are closed because of fraudulent behavior, most are closed due to overdrafts.

Some initiatives intended to help consumers gain or regain access to basic checking accounts cite that having a negative “hit” on a checking account screening report is a primary barrier to getting an account.

How the system works

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. These specialty CRAs collect information on consumer check writing and account history from financial institutions, including whether a consumer has had a previous account closed. The information may include a record of bounced or returned checks and overdrafts. It is used by financial institutions to decide whether to offer a checking account to consumers, and what kinds of restrictions to place on the account. Policies on what is reported and how it’s reported vary among financial institutions. This makes it difficult for consumers to determine which of their previous account problems might disqualify them for an account.

Learn about issues and roles

At today’s forum, we’d like to shed light on a few things, including:

  • Issues consumers face when trying to regain access to a checking account
  • The role that Credit Reporting Agencies and financial institutions play when consumers apply for a checking
    account
  • Data used as part of the account opening decision
  • How institutions set their risk tolerances
  • Definitions of fraud and improper account usage

We also hope to identify some potential next steps, including:

  • How to increase the accuracy of data furnished to and reported by consumer reporting agencies
  • How institutions can use various screening tools to manage risk without unnecessarily excluding potential accountholders
  • How institutions can tell consumers about their right to know what’s in their account histories and correct any inaccuracies
  • How consumers can access different account products that meet their needs

Save the date: Join us for a forum on access to checking accounts

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Join us for an event in Washington, D.C. on checking account screening policies and practices. This event will take place on Wednesday, October 8 at 8:30 a.m. EDT.

We’ll host a discussion on how checking account screening policies and practices impact consumers. The event will inform the dialogue around how the screening system works and how to improve the availability of information and products for consumers.

The forum will feature remarks from Director Richard Cordray, as well as presentations from consumer groups, federal and local government officials, and industry representatives. We’ll also have discussions about current bank account screening practices, the effect these practices have on consumers’ ability to acquire and use checking account products, and more generally, the availability of financial products and services that meet their needs.

Wednesday, October 8, 2014
8:30 a.m. to 2 p.m.
Washington, D.C.

This event is open to the public, but RSVP is required to attend. Please RSVP here and let us know if you need an accommodation to participate. You can also take a look at the agenda. A livestream will be available on the blog.

We look forward to seeing you there!

Updated on October 7, 2014 to include the agenda.

So, how do I submit a complaint?

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This post is part of a series for National Consumer Protection Week

We began taking credit card complaints in July 2011, and we now can help with complaints about mortgages, bank accounts and services, student loans, vehicle and other consumer loans, and credit reporting.

How do I submit a complaint?
Submitting a complaint and tracking your status is simple and secure. The fastest way to get started is to go consumerfinance.gov/Complaint. If you need help while you’re online, you can chat with one of our team members on the site.

You can also submit a complaint over the phone by calling us at (855) 411-CFPB (2372), toll free. Our U.S.-based call centers can help you in over 180 languages, and can also take calls from consumers who are deaf, have hearing loss, or have speech disabilities.

What makes an effective complaint?
The best complaints are the ones that explain, clearly and concisely:

  • What happened, including key details and documents,
  • What you think would be a fair resolution, and
  • What you’ve done to try and resolve it.

What happens after I submit?
After you’ve submitted your complaint you can check its status at consumerfinance.gov/Complaint or by calling us at (855) 411-CFPB (2372). We’ll also send you email updates along the way so you know where you are in the process, and what’s next.

After the company responds to your complaint, we’ll email you, and you can log back in to review the response and give us any feedback.

Every complaint helps us in our work to supervise companies, enforce federal consumer financial laws, and write better rules and regulations. You speaking up gives us important insight into the issues you face as a consumer, so thank you!

Learn more about submitting a complaint: consumerfinance.gov/Complaint

Meet Greg from Michigan

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Since we launched on July 21st 2011, we’ve heard directly from consumers about the challenges they face in the marketplace, brought their concerns to the attention of financial institutions, and helped address their complaints. Accepting, resolving, and analyzing consumer complaints is an integral part of our work.

This week, we’ll be featuring stories from consumers who we have helped, and who have agreed to let the CFPB make their stories public.

Greg, a 39-year-old insurance adjuster from Michigan, whose credit rating was damaged after a bank failed to tell him that an account with which he was associated was in arrears.

Greg added his name to his 71-year-old mother’s checking account after he helped her move into an assisted living facility. Six months passed without Greg getting any statements or hearing from the bank. Little did he know, however, that his mother had written a check and the account was racking up big fees because its balance had fallen below zero. He found out about it when he checked his credit report and saw that he owed a collection agency $469.

Greg paid the bill but his credit was harmed and he says the bank wouldn’t help. After the CFPB got involved, the bank apologized for their error, called off the debt collector, and had Greg’s negative credit record removed.

Learn more

To see more about how we handle consumer complaints, read our Consumer Response Snapshot and to see all credit card complaints, visit our consumer complaint database.

Comment period on overdrafts extended to June 29

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In February, we launched a public inquiry and an industry research study to gain insight into overdraft practices. Both initiatives are continuing and will provide us with great perspective on how overdraft programs work.

The Notice and Request for Information originally called for all public comments by the end of this month. While we’ve already netted a tremendous number of responses, we’ve also received requests for more time. So, we have decided to extend the deadline 60 days to June 29 to ensure all stakeholders have sufficient time to respond to our questions and enable us to learn as much as we can from the public’s input.

Consumers sometimes use overdraft programs to meet critical cash flow needs. However, overdraft programs also have the capacity to inflict serious economic harm on individuals. We heard numerous stories at our event in New York and since of how consumers racked up large fee balances, sometimes unknowingly. At the same time, we appreciate consumers can benefit greatly by having their bank or credit union cover an important payment that may have otherwise bounced.

We are committed to being an information-driven organization. In our quest to monitor risks posed to consumers in the financial services marketplace, we have set out to understand the impacts, both good and bad, that consumers derive from bank overdraft programs. In addition to how overdraft programs work, we are interested in:

  • How consumers utilize overdraft programs,
  • The information provided to consumers that inform their everyday banking decisions,
  • Alternatives consumers have for meeting short-term shortfalls,
  • How recent regulations and changes in bank products and terms have impacted overdraft incidence, and
  • The costs financial services providers incur to provide banking and overdraft services.

The information we collect will inform how we regulate and the guidance we give to consumers to make smart financial decisions.

Do you have a story or information to share with us? If so, please submit a response to the Request for Information.

Advancing consumers’ interests

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As President John F. Kennedy said in 1962, “The federal government — by nature the highest spokesman for all the people — has a special obligation to be alert to the consumer’s needs and to advance the consumer’s interests.” That obligation is at the heart of the Consumer Financial Protection Bureau’s mission and is on full display in our consumer response function.

Since last year, our consumer response team has been taking complaints on credit cards and mortgages. We are hearing directly from consumers about the problems they face and are helping them bring their concerns to the attention of their financial institutions. (more…)