February 4, 2015
By Neal Tepel
New York, NY – Citibank has agreed to adopt new policies governing its screening of lower-income customers seeking to open checking or savings accounts. Citibank’s will now allow thousands of additional New Yorkers and consumers nationwide to open bank accounts.
The change comes amid concerns that screenings by ChexSystems and other consumer reporting agencies used by most of the nation’s banks, adversely affect lower-income applicants. Those having difficulty obtaining loans and opening bank accounts are often forced to turn to high-cost alternative financial services like check-cashing outlets. Citibank has joined Capital One as the second bank to commit to overhauling its banking and loan availability procedures.
“No one should be denied access to a bank account because of a bounced check from years ago or because they were a victim of identity theft,” Attorney General Schneiderman said. “Denials like these force low-income Americans – and New Yorkers in particular – to resort to high-cost alternatives to banks, simply because of a small financial error in the past. I commend Citibank, following Capital One, for stepping up and working with us to help eliminate an unnecessary barrier to opening a checking or savings account. I look forward to working with additional banks willing to do the same.”
ChexSystems is one of several databases used by some of the nation’s largest banks and credit unions to analyze the banking history of consumers who apply for bank accounts and loans. Customers who are deemed by ChexSystems to present a credit or fraud risk are denied the opportunity to open an account. These screening companies usually affect lower-income Americans forcing them to utilize costly alternative financial services . Without access to mainstream banks, consumers are vulnerable to theft and predatory lending practices.
Marc Morial, President and Chief Executive Officer of the National Urban League, said, “Too many African-American and Latino communities are denied access to traditional banking products and left vulnerable to costly and predatory check cashing outlets.”