Condemn Blacklisting of Low-Income Americans from Mainstream Financial Institutions


Target: Chairwoman Edith Ramirez, Federal Trade Commission

Goal: Demand that financial institutions stop ordering private databases to compile data of consumers’ financial mistakes for discriminatory practices.

Low income Americans are being “blacklisted” by mainstream financial institutions due to mistakes such as bounced checks and small overdraft fees for periods as long as seven years. Private databases such as ChexSystems are being used to provide accounts of consumers’ financial “transgressions” to mainstream financial institutions such as Citibank, Bank Of America, and Wells Fargo. Subsequently, many low-income Americans who live paycheck-to-paycheck are having trouble opening checking accounts at mainstream financial institutions.

Databases such as ChexSystems came into operation twenty years ago and were originally intended to combat fraud, not to compile data on individuals’ financial mistakes. The New York City Department of Consumer Affairs states that financial institutions’ growing reliance on customer databases “hurt efforts to help an estimated 825,000 New Yorkers without bank accounts gain access to mainstream financial systems.” Furthermore, the NYCDOC reports that without access to checking accounts, “many low income people have no choice but to turn to costly fringe operations to cash checks and pay bills.” These sorts of operations often cost twice as much as much as a checking account at a mainstream financial institution.

The New York Times reports that the number of Americans who lack bank accounts has risen ten percent since 2009. In addition, many banks are closing their branches in lower-income neighborhoods. Don’t let these major financial institutions discriminate against low-income Americans. Tell the Federal Trade Commission to investigate the use of private databases by mainstream financial institutions, and to stop the abuse of these databases risk-averse bankers. Databases such as ChexSystems should be used to combat fraud, not to punish hard-working American citizens.


Dear Eliza Ramirez,

Major financial institutions such as Wells Fargo, Bank of America, and Citibank are abusing databases set up for the purposes of combating fraud. They use databases such as ChexSystems to garner information about consumers’ financial mistakes. Subsequently, many low-income Americans who at one time may have bounced a check or overdrawn their accounts by a small amount are being blacklisted by major financial institutions. Consumer advocacy groups such as New York City’s Department of Consumer Affairs have warned that this approach, taken by risk-averse banks, hurts their efforts to “help an estimated 825,000 New Yorkers” who lack bank accounts.

Bank accounts have become necessary in contemporary American society. Many workers who live paycheck to paycheck are often forced to pay twice as much to pay bills, cash checks, and wire money due to their lack of a back account. The punitive use of databases such as ChexSystems to “weed out risky customers,” as the New York Times put it in a recent article, strays from the program’s original intent to combat fraud and encroaches on individual privacy rights.

Minor financial mistakes that have been corrected should not prevent hardworking Americans from opening bank accounts. Tell institutions such as Wells Fargo, Citibank, and Bank Of America to use these databases for their original intent, and to stop punishing low-income Americans who have corrected “relatively small” financial mistakes by denying them the ability to open checking accounts at major financial institutions.


[Your Name Here]

Photo Credit: Mike Licht via Flickr

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