National check approval systems are a bane for consumers who bounce checks and get blacklisted.

San Diego, CA - Someone is watching all those bounced checks and other overdrafts created by debit and ATM card use. Just like too many late payments on credit card accounts will bring about higher rates of interest and having the account closed by the issuer; and just like too many speeding tickets will cause the loss of a driver s license; also true is too many bounced checks and overdrafts will cause a bank or credit union to close an account.

Well, just go to another financial institution you might say. Not so fast. The other banks and credit unions likely already know about the overdraft history and closed accounts. How could that be?

The people watching the bounced checks, overdrafts, account closures have names like ChexSystems and TeleCheck. These companies offer check approval, guarantee and verification to banks, credit unions, retailers, and grocery stores, who in turn use it determine whether or not they will accept a consumer s check or if a credit union or bank allow them to open a new account. This is a another bane for consumers unfortunate enough to have had insufficient funds activity on their checking accounts, even if it was the result of fraud or identity theft. They could be blacklisted for up to five years.

ChexSystems is among the nation s largest groups collecting data on closed-for-cause accounts from some 90,000 credit unions and banks. ChexSystems and companies providing similar services are regulated by the Fair and Accurate Credit Transactions Act (FACTA) in much the same manner as credit reporting agencies.

Just because these companies are subject to the same disclosure and reporting requirements as the major credit reporting agencies, consumers rarely know about or monitor their records on these check approval systems. Further, those that have their checks refused because of mistakes or fraud on their report, often encounter great difficulty in clearing their name.

Banks and credit unions rely on these reporting firms to help screen applicants for new checking accounts. One reason is checking accounts don t generate much income and if too many scofflaws get accounts the exposure to fraud is greatly increased. It is estimated banks lost $1.6 billion in 2002 and merchants lost some $15 billion to bad checks.

If a listing happens in error, most of the companies, ChexSystems included, will help correct things with the bank and remove the name from the database. To order a check report, contact the companies through their Web sites or their 800 telephone numbers listed below. Most consumer reports range from $0 - $8 depending the state of residence, If there is a file, it would contain negative information about bounced checks and evictions from apartments, as two examples. Many consumers will not learn about these files until they have had a check submitted for approval of a purchase denied.

If a consumer finds a mistake in their file, they must contact the company on the Internet or write a letter of dispute, have it investigated and receive a written report on the results. Consumers should also report the fraudulent use of checks IF they have been the victim of check forgery resulting in non-sufficient funds (NSF) activity on any checking/share draft account(s).

ChexSystems (www.chexhelp.com) 1-800-428-9623

SCAN (www.scanassist.com) 1-800-262-7771

TeleCheck (www.telecheck.com) 1-800-710-9898

About Checking is a pilot program from the University of Wisconsin, who collaborated with credit counselors and other consumer advocates to help consumers who end up in the database by their own hand with the About Checking course. People must attend a class, successfully complete it, and pay off all outstanding debts arising from the bad checks. Next, participating banks or credit unions will open a new account and give them a second chance. For more information visit: www.aboutchecking.com.

For those caught in the NSF check database, there is also a listing of banks and credit unions that do not use ChexSystems.