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Capital One to Limit Use of Customer-Screening Databases

June 16 (Bloomberg) -- Capital One Financial Corp., with more than 250 branches in New York, agreed to limit its use of customer-screening databases that barred many low-income consumers from getting bank accounts, state officials said.

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

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

The attorney general’s office also sent letters inquiring about the use of ChexSystems and similar programs to Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co.

Joseph Evangelisti, a spokesman for JPMorgan, Bank of America spokeswoman Anne Pace and Richele Messick, a spokeswoman for Wells Fargo, declined to comment on the letters. Danielle Romero-Apsilos, a spokeswoman for Citigroup, didn’t have an immediate comment on it.

Under the agreement announced today, McLean, Virginia-based 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, he said.

Needless Barrier

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, 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.

“The changes to Capital One’s policies, which are expected to take effect by the end of 2014, will be implemented nationwide,” according to the attorney general’s statement.

Capital One has branches primarily in New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia, according to its website.

The Consumer Financial Protection Bureau is also monitoring banks’ use of specialty consumer reporting agencies as screening tools, Moira Vahey, a spokeswoman for the agency, said in a statement.

Capital One rose 0.7 percent to $81.04 today in New York, after climbing as much as 1.2 percent before the close of trading.

About 7.7 percent of people in the U.S. are “unbanked,” meaning they don’t have a checking or savings account, according to the Washington-based Corporation for Enterprise Development. Almost 18 percent are “underbanked,” meaning they have accounts while continuing to rely on check-cashing, pawn shops and other financial services, according to the organization.

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at; Christie Smythe in federal court in Brooklyn, New York, at

To contact the editors responsible for this story: Michael Hytha at Peter Blumberg

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