Attorney General Eric T. Schneiderman is calling on banks in New York state to change their consumer-screening protocols to ensure more consumers have access to standard checking accounts.
Schneiderman laid out his points in a letter issued to about 100 banks, including M&T and First Niagara, which are the Buffalo Niagara region’s leaders in deposit market share.
The attorney general previously signed agreements with five banks to expand mainstream banking for unbanked and underbanked communities. Now he says he is urging other banks in the state to “follow the lead” of Chase, Citibank, Capital One, Santander and Amalgamated.
“It is critical that low-income Americans – and New Yorkers in particular – have access to mainstream banking services,” Schneiderman said in a statement.
Schneiderman’s office had looked into methods banks use to screen applicants for checking accounts, and said their use of agencies like ChexSystems and Early Warning Services are causing some banks to “unnecessarily reject many thousands of applicants throughout the state.” Schneiderman said many applicants are being rejected for “minor financial missteps,” some of which may have occurred years ago.
Schneiderman said more than 2 million households in New York state lack access to mainstream bank accounts, and that African-American and Hispanic consumers are disproportionately affected. Customers unable to obtain mainstream checking accounts are often forced to turn to high-cost alternatives, such as non-bank money orders, cash-checking outlets and pawnshops, with higher interest fees and interest rates, he said.