Capital One to limit controversial bank account screening tool

Capital One Financial Corp., agreed to limit its use of customer-screening databases that barred many low-income consumers from getting bank accounts, New York state officials said. Monday

Capital One will no longer use ChexSystems, a computer program that screens customers seeking to open checking or savings accounts, to decide whether consumers pose credit risks, New York Attorney General Eric Schneiderman said in a statement.

Schneiderman has been investigating whether ChexSystems and other fraud-screening tools unfairly exclude poorer consumers and victims of identity theft from getting bank accounts.

The attorney general last year sent letters to six banks, including Bank of America Corp., JPMorgan Chase & Co. and Capital One, inquiring about lenders’ use of the programs, according to the New York Times. The newspaper reported Schneiderman’s agreement with the bank Sunday.

Under the terms of the agreement, Capital One can still screen applicants for past fraud, according to Schneiderman. As part of the accord, the bank won’t use reports of bounced checks, for example, to bar customers from obtaining accounts.

In his statement, Schneiderman praised Capital One’s willingness to “eliminate an unnecessary barrier to opening a checking or savings account” and urged other banks to follow its lead.

Capital One, which is also the fifth-biggest U.S. credit- card lender, was pleased the agreement worked to “expand access to critical banking services to all New Yorkers,” Kleber Santos, a bank official, said in a statement.

This story was originally published June 16, 2014 at 10:29 AM with the headline "Capital One to limit controversial bank account screening tool."