If you think or are aware that you have been reported to ChexSystems, it is critical that you understand why. Here are some of the most prevalent circumstances that result in persons being added to their database.
1. Check Kiting
Check kiting is a sort of check fraud that will not only raise red lights with ChexSystems but will also very certainly put you in jail.
Kite checkers write a check from one bank’s account and then write another check from another bank’s account to cover the cash taken out from the first bank account, even if there aren’t enough funds to pay the expenditure.
This type of check fraud is frequently committed across many banks, generally more than three. Those who engage in this type of criminal behavior will almost certainly be caught and may suffer far more serious consequences than simply having their bank account closed. Check kiting frequently leads to jail time.
2. Check Floating
Check floating is a type of check fraud that has sadly grown popular. It began when it may take several days, if not a week, for a check to clear.
People that floated checks would write a check knowing that they didn’t have enough money to pay it but also knowing that they would be paid within a few days.
This wasn’t a big deal when checks took a long time to clear. However, with the advancement of quicker technology, checks may now be cleared the same day, if not within minutes.
Keeping this in mind, people who do not have enough cash in their account when the check clears are more likely to have their check bounce now that check clearance times are so quick.
3. Excessive Overdrafts
Overdrafts occur when you withdraw more money than your account balance allows. This might occur when you make a purchase that exceeds the amount of money in your account.
When this occurs, one of two things can happen. The transaction is refused in the best-case situation. The worst-case scenario is that the transaction goes through and results in an overdraft to your account, which normally entails a cost.
Overdrafts must be avoided if you want to preserve excellent financial status with your bank. They are not only costly but they will very certainly be reported to ChexSystems.
4. Outstanding Balance
Any negative amounts on your account must be settled. Unpaid balances can build up as a result of overdrafts and inadequate funds charges. They can also result from cashing a bad check.
You will most likely be reported to ChexSystems if overdue amounts are not paid on time and the account is not brought back to positive.
5. Leaving Old Accounts Open
When moving banks, consider canceling your current account before starting a new one. This is due to the fact that former bank accounts that are still open might accrue fees that you are unaware of when banking with another bank.
Failure to pay those fees may result in outstanding balances, which may be reported to ChexSystems again.
6. Checks That Bounce
Writing a check with insufficient funds in your account will result in a bounced check.
Consumers who have overdraft protection may believe they are not at risk, but banks may view this as a negative action and will report you to ChexSystems. Bouncing a check instantly places you in the high-risk category, making it unlikely that you would be approved for a checking account by other banks.
7. Inadequate Account Information
Opening an account in the name of someone else is unequivocally fraudulent. Committing fraud can land you in significant legal jeopardy, making ChexSystems the least of your concerns.
When applying for a bank account, never offer information that you know is false. When you sign an application, you are confirming that all of the information you supplied is correct.
If the information is later proven to be incorrect, you will be reported to ChexSystems and may face legal consequences.