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1 million customers are blacklisted by banks

If you've been rejected by banks, the bitter truth is that you may not have many options. But there are some things you can do.

By MSN Money Partner Oct 23, 2013 1:32PM

This post comes from Marilyn Lewis at partner site Money Talks News.

Money Talks News on MSN MoneyAre you one of the million or so Americans who can't get a bank account? If you are, you know that banks -- not only your bank but all banks -- can reject you if they think you're more trouble or expense than you're worth.

Bank sign © John Foxx, Stockbyte, Getty ImagesBanking customers' names are gathered in "little-known private databases used by the nation's major banks," The New York Times reports.

More than a million customers have been rejected for services because of black marks against their names in these databases, the Times says. One thing that most blacklisted consumers have in common: They're low-income.

These are not credit-scoring systems used to assess you for a credit card or mortgage. These are different databases, used internally by banks. At least initially they were developed to fight fraud. But the databases have evolved, also, into a risk-management tool that banks reportedly use to reject customers who might cost the bank more than their business is worth.

CNNMoney tells the stories of four people rejected by their banks. It learned that:

About 80% of the nation's banks use information from the (ChexSystems) database to screen bank account applicants. Most negative information on a person's report stays in ChexSystems’ database for five years, according to ChexSystems.

When your name gets a black mark on one of these databases -- for reasons ranging from too many overdrafts or bounced checks to identity theft (one man told CNN that he was rejected after ID thieves drained his accounts, causing bank fees to pile up) -- suddenly life gets very difficult. Banks may shut you out from their services for up to seven years.

Bank accounts: A staple of modern life

Being shut out from the mainstream banking system is no small inconvenience. Bank accounts are a necessity of modern life. Electronic payments -- credit cards, debit cards and electronic bill payments -- are rapidly replacing cash (and checks), and bank alternatives -- check-cashing companies, pawnbrokers and payday lenders -- can be time-consuming and costly.

David Korzeniowski, 23, a part-time construction worker, told the Times that since a financial "mistake" caused him to be rejected by mainstream banks, fees for paying bills, cashing checks and wiring money have eaten up a large part of his paycheck. "Everything is more expensive," he said.

The Times spoke with Jonathan Mintz, commissioner of New York City’s Department of Consumer Affairs:

"Hundreds of thousands of Americans are being shut out for relatively small mistakes," Mr. Mintz said.
As a result, many have no choice but to turn to costly fringe operations to cash checks, pay bills and wire money. Saving for the future, financial counselors say, can be especially difficult.

Try to clear your name

If you've been rejected by banks, the bitter truth is that you may not have many options. But there are some things you can do.

The Fair Credit Reporting Act requires a bank to disclose why it rejected your business. That doesn't mean the explanations will be clear or easy to understand, however. Make sure that, at the minimum, any information you get from the bank tells you the name of the company that has flagged a problem.

Get that company to give you a copy of your report. Read it carefully, looking for errors. If not corrected, negative information can remain for five years on the report. So you'll want to dispute anything that's incorrect. ChexSystems' consumer assistance page, for example, explains how to file a dispute with that company. Consumers are entitled to one free annual ChexSystems report.

In reality, consumer advocates and federal regulators told the Times, it can be difficult to get errors removed from your report -- or even to get a copy of your report in some cases. "Some databases … provide scant details of the reason for the negative mark, according to a review of more (than) two dozen letters," the Times writes.

A "second-chance" account

Some 15% of customers who are rejected by their banks are offered a so-called "second-chance" bank account, CNNMoney says. That article describes second-chance accounts offered by Wells Fargo, PNC and Chase.

The downside: While these accounts do give you access to the banking system and a way back into mainstream banking, they're expensive.

"Consumers who would complain about the fees have to recognize that they've earned them, and when your financial service options shrink, the prices go up," John Ulzheimer, CEO of, told CNN.

Find the right prepaid card

If you can't get -- or don't want -- a bank account, prepaid cards are another route that offers the convenience of credit cards. In fact, the right prepaid card might be cheaper than a second-chance account.

Caution: Choose a prepaid card very carefully. They can be loaded with fees. Also, understand that using a prepaid card will not help you build your credit score, as a credit card would.

More on Money Talks News:

Oct 23, 2013 4:04PM
I haven't had a bank account in over 40 years. Credit Unions are the only way to go.
Oct 23, 2013 4:02PM

Marilyn Lewis, thank you for showing me that I don't want to read any advice you give in the future.  Not ONE mention of a credit union.  But instead, high revenue (for the banks) 2nd chance accounts or pre-paid cards. 


Don't listen to this banking crony.  Go to a Credit Union.  They are WAY better than banks anyways.

Oct 23, 2013 5:04PM
If you bounce checks I wouldnt want to do business with you either.
Oct 23, 2013 4:38PM
I have had a bank account for years and have NEVER once paid ANY kind of fee. If you follow the rules of the account and don't spend money that you don't have you'll be fine. For those of you who claim that this is class discrimination, know that I make less than $30,000.00/year, so I am clearly not wealthy!
Oct 23, 2013 4:11PM
This system should have been used for the banks wanting bailout money. Also, going forward this system should apply to them. Problem solved. No more taxpayer money to banks.
Oct 23, 2013 4:59PM
what do you mean not spend money you do not have in your checking account.  the fed govt been doing it for years and their bank allows it called the fed reserve
Oct 23, 2013 3:56PM
If you cannot control your spending with  a checking account do not open one, just because you have checks left does NOT mean you can write a check for something and not have the money to cover that check with out consequences. You need to be an adult and own up to your mistakes, who do you think pays in the long run for your free spending sprees?? the consumer does since it make the store have to eat that expense if the bank rejects the check. They have to make up the money somewhere. If the store doesn't then the bank eats the money since they covered the check and you did not pay them back the money with the bounced check fee ( this is to cover the money they fronted you just not for the fun of it!). Grow up and be responsible for your actions or do not open an account, it is that simple!
Oct 23, 2013 4:11PM
Another excuse story for deadbeats..those who bounce checks knowing they have no funds and walk away from accounts, these people are deadbeats.. period.. the same gang that took out mortgages they had no thought of repaying.. took out second mortgages and never paid.. stay on unemployment, get foodstamps, free phones.. and so on. The leeches of society.
Oct 23, 2013 4:27PM
OMG!  consequences for your actions?  That's unacceptable!

Vote Democrat and you'll never be responsible for anything ever again.

Look at Obama, it's always someone else's fault.
Oct 23, 2013 5:31PM
gee banks don't want people that bounce checks and never pay?  shocking!
Oct 23, 2013 4:41PM
This article smells fishy. Banks love the poor and the incompetent. The majority of bank fees are gathered from this small group of customers. Moral of the story if you want to stay off the list PAY YOUR DAMN BILLS!
Oct 23, 2013 4:21PM
JAIL TIME for bad bankers.  Give them an incentive to be moral for a change.  
Oct 23, 2013 5:13PM

Not really a story here. Banks won't open accounts for people who bounce checks. And?

Oct 23, 2013 3:24PM
I know it's Wal-Mart and I hesitate to recommend anything from Wal-Mart, but Amex and Wal-Mart have joined together to market the Bluebird prepaid card which also offers prepaid checks and is a great alternative to a checking account.  There are zero fees attached to the Bluebird card and if you reload by direct deposit or at Wal-Mart, there is no reload fee.  I have had the card for almost two years and have had no issues with it other than occasionally a business might not take Amex.  In that situation you can go to an ATM.  In network ATMs are free.  The card does not charge you for an ATM transaction.  You can set up bill pay with the online component and you can accept a check from a business or person by taking a picture with a takes about 5 days to get into your account, but you never have to go to a bank. If you do not have a smartphone, you can mail in deposits.  Other Bluebird card holders can send you money without a fee.  If you need customer service, most of the reps I've talked to speak English.  
Oct 23, 2013 3:49PM
Oct 23, 2013 5:24PM
If you took a 0 down,0% teaser mortgage and walked I would blacklist you also. Oh yea and got to live in the house for a couple of years  free.
Oct 23, 2013 6:57PM

Gee, it's funny how these banks can give the consumer a bad name and make their lives miserable, aren't they are the ones who are corrupt and deceive people?  But yet we pay the price for their mistakes and for their greed and deception!! If the average person did what they do, we would be in prison.  It's disgusting how everyone is taken advantage of for their benefit.

Oct 23, 2013 4:56PM
Marilyn Lewis needs to learn the difference between their, there and they're.
Oct 23, 2013 3:28PM
Between this and the Fact that Credit Scores are also a Scam, how much more will "We the People" take. It's all a racket by the Money Changers to steal even more from the Working Poor and Fading Middle-Class. Why won't the Tea Party get up in Arm about things like this. If they did, maybe more folks would support them.

(I just edited by adding also, that should make clear I am talking about two separate things. I am referring to folks being blacklisted by Banks and also the issues of Credit Scores.)
Oct 23, 2013 3:45PM

Was mistakenly put on "check systems" years ago. A major pain-in-the-rear that took months to correct.


Ahhhhh......Banks are your friends.....

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