Banks Freeze and Close

ChexSystemsVictims

Someone emailed me and asked if banks really open checking accounts and then later close them if they find out you are on Chexsystems. Unfortunately yes, there have been instances where this has happened. It seems more common amoung some banks than others.

Some banks have online applications that will approve immediately. Then the bank will wait until the signature card is sent in to actually look at the Chexsystems report. At that point, they will send back the initial deposit and close the account.

Then there are other banks that do "sweeps" on accounts. This is where a bank, generally the loss prevention department will do a random check on accounts with chexsystems. If they find that the customer has a chexsystems record, they then will determine that they person may be a risk and they will freeze account, and later close it.

For these reasons I always suggest that if you have been reported to chexsystems that you try to find a bank that does not use ChexSystems if at all if possible. Now an exception to this rule is if a bank opens an account and is aware of the chexsystems report. Most times you will be fine with these circumstances. Unfortunately, there have been situations that were reported to me where for example a manager of a branch decides to open an account and over ride the chexsystems report for the customer. Then later the loss prevention department determines that the manager was not correct to open it and once loss prevention decides it is a potential risk, they will freeze the account and then close it.

These situations can create a very bad situation for some customers especially is they have all of their money in this one account when it is frozen and closed. If a bank does decide to freeze an account, they will not allow a customer access to their money for a period of time that is normally 30 days or more. I can not begin to tell you the horror stories that I have heard over the years when this happens. Because of this, I suggest that you always have a back up account if you are going to bank with a bank that uses chexsystems.

For this reason we believe Chexsystems is unfair.

Important Note Regarding Frozen Funds:

Fight It!

1) Go into the bank and speak with the branch manager where you have the account.
2) Demand to see in writing where the Federal Reserve allows them to hold your funds for that extended period.
3) Send a fax to both the local branch manager and a bank executive [VP], demanding your money. Ask them to show you legal proof that allows them to hold your funds hostage

3) In the fax, tell them if they do not release your funds immediately, you will find complaints with the following authorities:

- The Attorney General for Your State
- The State Agency that Regulators the Bank
- The Local Justice of the Peace

Another reason banks will close accounts. Be careful not to deposit a bad check.

Three primary rules about deposits:

1 - The primary account holder is responsible for any deposits.
2 - Always verify if a check is good with the issuing bank. If you cannot verify, then request a cashier's check from the issuer. Then - verify the cashier's check before depositing it.
3 - Never accept checks from individuals you do not know. If there is not an established business or personal relationship, you are taking a hugh risk.

Legally, the account owner is bound by the agreement that was signed when the account was opened. Most standard agreements indicate the primary account holder is responsible for deposits and will maintain the account in a positive status.

1. Contact the branch manager where the account was opened. Ask them for the final statement showing all transactions immediately before the closing. Indicate you want to know what you owed after your direct deposit was applied.

2. Also, try to work out a payment arrangement that included Chexsystems removal - or at the very least an entry update that shows the account charges were paid.