ChexSystems Disputes
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Sue ChexSystems?

It is your legal right to dispute any item on your credit report, for any reason.  If documented proof that discredits your dispute isn't provided within 30 days, it MUST be removed by law.  This is why it is so important to send the dispute form via certified mail.  Not only to insure its delivery, but to have documented time of when it was sent.

If they do happen to verify your debt within 30 days, the next step is to send a dispute/validation letter to the bank that is reporting the negative information about you to Chexsystems.  Proof being in the form of something tangible, which is indisputable, not the form letter that they generally send out to everyone that states that it has been verified.

Simply saying, "Yes, this debt is yours" is not acceptable.  Even if they do verify with indisputable evidence, they are required to report to Chexsystems that you disputed the information in your Chexsystems file from this bank.

They never do.  Again, get your latest Chexsystems report and see if they have now reported your information to Chexsystems as "Consumer disputes as per FCRA".  If they didn't, you have them in a violation of the Fair Credit Reporting Act, Section 623. 

Next, send an intent to sue letter to the bank, offering that you will accept deletion of the entire debt in exchange for you dropping the suit.  If they do not respond to your liking, take them to Small Claims court, which only costs around $20-$30

When they are served notice of a court date, they will settle 99.9% of the time.  If they do appear in court, you will win because you are not suing for proof of the debt, you are suing them for violating the FCRA.


You should know that Chexsystems is a consumer reporting agency, just like Equifax, Experian, and Trans Union.  Therefore, you are protected by the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA).  Here are they 3 most common ways to catch banks (that use Chexsystems) in violation of the law:

1) Dispute the debt with the Chexsystems reporting bank using letter # 4 sent via certified mail, return receipt requested.  If they fail to respond to your dispute within 30 days, they are in violation of Section 809 of the FDCPA.

2) The bank verifies your debt as valid with a Consumer Reporting Agency (Chexsystems) without being able to validate the debt with you as per FDCPA § 809, which is a violation of the FCRA § 611.

3) The bank does not notify any such said Consumer Reporting Agency (Chexsystems) that the consumer is disputing the debt, which is a violation of the FCRA § 623(a)(3) and the FDCPA § 807(8).

# 3 is usually the most common violation.  If you dispute your debt, the bank or collection agency is required by law to report your debt as disputed.  If you get your Chexsystems report 30 days after the bank or collection agency receives your dispute letter, check to see if it is listed as disputed.  If not, they are in violation of the FCRA.  You can then file a claim against them in Small Claims Court, which is very simple and will only cost you around $20-$30. 

99.9% of the time, they will immediately delete the entire listing in your Chexsystems file in exchange for you dropping the lawsuit.  They don't want to spend more money to hire a lawyer to appear in court on their behalf.  Even if they did show up, you are suing for violation of the FCRA and/or FDCPA, which you will have proof of.  You are not going to court to try to prove that the debt isn't yours.

Section 623(a)(3) of the Fair Credit Reporting Act:
§ 623.  Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C.  § 1681s-2]

(a) (3) Duty to provide notice of dispute.  If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.

Section 807(8) of the Fair Debt Collection Practices Act:
§ 807.  False or misleading representations [15 USC 1962e]
(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.

Typically, you can sue for up to $1,000 per violation of the above laws.


What if ChexSystems Stands by Its Report?

You have the right to present your side of the story in a brief statement (100 words or less), which chexsystems must attach to your credit file. Your statement should be used to clarify inaccuracies, not explain reasons for delinquency. Anyone requesting a copy of your credit report would also automatically receive your statement (or a summary of it), unless the credit bureau decides that it is irrelevant or frivolous.




Before taking this step make sure you send a certified letter to the headquarters/ CEO of the reporting bank along with copies of the documentation of your disputes. 




This is a formal notice of dispute regarding information (name of bank) sent to Chexsystems, a consumer reporting agency.  The following false information was sent to Chexsystems:

 (List the information the way it is shown in Chexsystems report)

This information was disputed with Chexsystems on (date), however, (name of bank) verified the information as accurate.   This falsely reported information damages my financial reputation and should be removed immediately.

(Name of Bank) reported __________ when in fact, no _________took place.   The account was not overdrawn,(name of bank) did not experience a loss of funds, and there was no illegal activity on the account.   There was no violation of the account agreement that governed the account.

 Under my rights under the Fair and Accurate Credit Reporting Act, I am asking for an immediate removal of the false information reported to Chexsystems and any other credit reporting agency that you may have reported to.  To date, my disputes with the chexsystems and (name of bank) have not been resolved.  Enclosed you will find copies of the disputes.  I am maintaining a careful record of my communications with you for the purpose of filing a complaint with the FTC and the state Attorney General's office, should you continue in your non-compliance.


 cc:  Bank Branch Manager (where account was opened).

If you've taken all of the above steps, with unfavorable results, you still have one, VERY POWERFUL final resort.  The final method is to file small claims suits against Chexsystems.  Most of the time they won't even put up a fight! They will settle, they will not show up in court.  Not only will they delete your record, sometimes they will actually pay you a cash settlement.  After all, they benefit nothing by reporting your negative information. 

When they are threatened financially, they usually settle for removal in exchange for you dropping the suit.  And remember, filing a small claims suit only costs around $20.  Don't forget, if the original bank failed to validate and show proof of a debt to YOU, how could Chexsystems possibly be verifying these debts!? They can't. 

This is because they verify the debts by contacting a $8 per hour clerk at the bank who says, "Yes, I see the debt listed on our computer." They call that verification.  But the courts do NOT consider that proper verification.  You will have many little known case laws to back you up.  This is the stuff the they don't want anyone to know! Chexsystems is a consumer reporting agency just like Equifax, TransUnion, and Experian.  They all fall under the same federal laws.

What you can file against them for:

"negligent and willful failure to reinvestigate the disputed entries in violation of sections 611(a), 616, and 617 of the FCRA, 15 U.S.C.  §§ 1681i(a), 1681n, 1681o"

A copy of a similar lawsuit appeal where TransUnion was completely trashed by the judge for their lackluster verification procedures can be found at: - In the search box enter something in reference to: "Cushman v.  Trans Union Corp., 920 F.  Supp.  80 (E.D.  Pa.  1996) or Cushman v.  Trans Union Corp., 115 F.3d 220 (3d Cir.  1997)"

Send a copy of the above case to Chexsystems legal department, and we'll bet that they will suddenly want to settle with you!
Some other cases you may want to reference are:

Richardson v.  Fleet Bank of Massachusetts - the court held that the company failed to follow reasonable procedures by relying on creditors for accurate credit information because the company had reason to know of the dispute between the consumer and the company.

Bryant v.  TRW - the Defendant consumer reporting agency unsuccessfully argued that, under §607(B) of the FCRA, 15 U.S.C.  §§1681 et seq., it was not liable as a matter of law, for reports it issued in good faith, and as a result of inaccurate information provided to it by Plaintiff's creditors.  The court held that Defendant was not free from liability when the credit reports at issue was not accurate.  Once inaccuracy was determined, defendant's agency procedures were determined to be not reasonable to ensure maximum possible accuracy, pursuant to §§607(B).  In Bryant v.  TRW, Inc., 487 F.Supp.  1234, 1242-43 (E.D.Mich.1980), the district court awarded a consumer $8,000 for anguish resulting from denials of a mortgage due to inaccurate credit reports.  The Sixth Circuit affirmed.  689 F.2d 72 (6th Cir.1982). 

Stevenson v.  TRW Inc., 987 F.2d 288, 293 (5th Cir.  1993).  - "Allowing inaccurate information back onto a credit report after deleting it because it is inaccurate is negligent."
Fischl v.  General Motors Acceptance Corp., 708 F.2d 143, 151 (5th Cir.1983).  - Actual damages include humiliation or mental distress, even if the consumer has suffered no out-of-pocket losses. 

In Pinner, 805 F.2d at 1265, the consumer was awarded $25,000 for mental distress because of the humiliation and embarrassment resulting from three credit denials and from lengthy dealings with the credit bureau.  The court did, however, order a remittitur from the original jury award of $100,000 mental distress damages.  Another consumer received $10,000 because of humiliation and embarrassment suffered from three denials of credit and from the fact that the credit bureau took several months to correct the credit report's inaccuracies.  Thompson v.  San Antonio Retail Merchants Ass'n, 682 F.2d 509, 513-14 (5th Cir.1982). 

In Collins v.  Retail Credit Co., 410 F.Supp.  924, 936 (E.D.Mich.1976), the court awarded a consumer $21,750 for embarrassment and humiliation. 
In Morris v.  Credit Bureau of Cincinnati, Inc., 563 F.Supp.  962, 969 (S.D.Ohio 1983), the consumer was awarded $10,000 for anguish and embarrassment even though, after he was denied credit, he explained the inaccuracies on his credit report and subsequently obtained credit. 

In Millstone v.  O'Hanlon Reports, Inc., 528 F.2d 829, 834-35 (8th Cir.1976), the Eighth Circuit upheld an award of $2,500 for mental anguish after an insurer cancelled the consumer's policy because of an inaccurate credit report. 

Ryan v.  Trans Union Corp., Case No.  99 C 216, 2001 - "The court held that defendants were entitled to a partial award of attorney's fees from plaintiff under the FCRA to the extent that plaintiff filed oppositions to defendants' summary judgment motions knowing that he no longer had a valid claim."


Can Chexsystems add you back once you are removed?

If the item is removed by Chexsystems under FCRA guidelines, the bank generally does not re-insert.  That is why following dispute guidelines and keeping a paper trail are important.

If the bank does add the information again, the paper documentation can be used to go after the bank, sending the bank an ITS - Intent to Sue letter.  Plus, you have a strong legal basis to file a complaint with the bank regulator.

*Note: If a bank re-inserts information, the FCRA says that Chexsystems must notify you within 5 business days.  If they do not, they must remove just based on that reason alone.

They have a legal requirement to notify you within 5 days after it was re-inserted.  I would contact them to get the exact date they re-inserted, versus the date of the letter.  There should be a clear time frame of 5 days.  If not, you can send a FCRA violations-intent to sue to their legal counsel

Try to get those specific dates.  When contacting them, never mention possible violations, simply state you are verifying the date the information was put back into your file.

Also, has a dispute letter been sent to the bank? Did the bank respond back within 30 days? FACTA [new FCRA amendments] gives you the legal option to dispute with the reporting creditor - after a bureau dispute was unsuccessful.

Sample letter for this violation:

Your Name
Your Address
Chexsystems Consumer Relations
7805 Hudson Road
Suite 100
Woodbury, MN 55125
RE: Consumer ID # (your consumer ID # here)

Consumer Relations Dept.:
I have recently been informed that the negative information reported by (name of bank) in your file maintained under my Social Security number that was removed on (date) has now been placed back in my file.

Please remove this information immediately. You are in violation on FCRA Part (A)(5)(B)(ii). Consumer Protection afforded by the FCRA demands that I be notified within 5 days. I was not notified within 5 days of this record being reinserted back into my file. This report is SEVERELY (if not completely) restricting my banking abilities. If not removed, I will be filing a small claims against your comaany for damages. Once this information is removed from my report please send me an updated copy that shows it has been removed from my file.  

My contact information is as follows:

Your Name (printed or typed, not signed)
Cc: (insert lawyer's name here)


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