ChexSystems, Debit Bureaus & Tangled Data Brokers

When people are careless with credit, it shows on their credit reports. But mistakes with their checking accounts show up on reports from debit bureaus.

Debit bureaus are data warehouses with decision support capabilities to help financial service companies and retailers make debit decisions, like whether to let a consumer open a checking account or whether to accept a check someone writes at a cash register. (Yes, some people still do that.)

Debit and credit bureaus operate in much the same way. The difference is that debit bureaus assemble information about account opening and closings, check order history, check writing history, collections data, frequency of debit and ATM card use, and demographic data such as household-level marketing information.

I wrote about this years ago, when I was working on a consumer advocacy Website. Most consumers understand the role of credit bureaus, but fewer seemed to understand the importance of debit bureaus or their rights in connection with them. Here is some background, along with a warning: Trying to follow the data trail will give you a headache.

Back in 1998, Deluxe Corp., Acxiom Corp., and what was then Fair, Isaac & Co. -- a company now known as FICO, for its proprietary consumer credit scores -- jointly formed the industry's first debit bureau.

Deluxe is best known as the world's largest check printer. Banks refer customers who want checks printed to Deluxe. The company, operating under the names Checks Unlimited and Designer Checks, also sells personal and business checks and related products directly to consumers. In 1999, Deluxe created a subsidiary called eFunds to handle some of its businesses, including the DebitBureau, ChexSystems (an account verification and risk management service), and SCAN (a check verification network). A year later, iDLX Technology Partners, another Deluxe unit, was combined with eFunds to add professional services and business process outsourcing capabilities. Just months later, Deluxe spun off the eFunds unit.

In 2007, eFunds was acquired by FIS, a global provider of technology and services to the financial services industry, "serving more than 14,000 clients in over 100 countries." That means FIS now owns the DebitBureau, which operates on data provided by that other former eFunds company, ChexSystems.

FIS owns a bunch of other data companies, too.

FIS' Acquisition Timeline

But let's focus on the DebitBureau.

What does the DebitBureau -- aka "the most comprehensive debit database in the world" -- do? More than you know. It says it gives retailers reports that capture "a consumer's complete financial record, complementing credit information with wide-ranging, historical debit information... detailed debit summaries about consumers who have or had checking or savings accounts, drawing on the billions of financial records."

Debit Report records incorporate data from ChexSystems, that new-account verification and risk-management service in the US; Certegy, a widely accessed check authorization network with more than a few consumer complaints; and the nation's check printers, including the largest -- Deluxe. (Remember that one?)

Basically, it comes down to this: A lot of huge data brokers are all in bed together. It is hard to determine exactly what role each one plays today (including Acxiom and FICO), but this much is clear. Somewhere in that bed these data brokers share, caught in all the mess of sheets and blankets and layers of stuff, you'll find a lot of your personal data.

But you have to look for it. And since it can make a difference in whether you can open a checking account, cash a check, and do who knows what else, then it is worth making the effort.

ChexSystems is considered a credit-reporting agency (CRA) under the Fair and Accurate Credit Transaction Act (FACTA) amendments to the federal Fair Credit Reporting Act. That means you are entitled to receive (upon request) a free copy of the consumer report it has about you every 12 months. To request a free copy of your ChexSystems report, click here.

Do it today. But don't breathe too easy even after you do. I'll tell you about some lesser known CRAs that have files about you another day.

Noreen Seebacher,

Noreen Seebacher, the Community Editor of Investor Uprising, has been a business journalist for more than 20 years. A New York City based writer and editor, she has worked for numerous print and online publications. Her work has appeared in The New York Times, the New York Post, New York’s Daily News, The Detroit News, and the Pittsburgh Press. She co-edited five newsletters for Real Estate Media’s and served as the site's technology editor.

She also championed the commercial real estate beat at The Journal News, a Gannett publication in suburban New York City, and co-founded a Website focused on personal finance. Through her own company, Stasa Media, Noreen has produced reports, whitepapers, and internal publications for a number of Fortune 500 clients. When she's not writing, editing, or Web surfing, she relaxes in an 1875 Victorian with her husband and their five kids, four formerly homeless cats, and a dog.

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Re: Clueless here
  • 8/15/2012 10:02:17 AM

Crazy, isn't it? A Data Broker for everything and anything

Clueless here
  • 8/14/2012 10:58:39 AM

Hi Noreen, well I must confess to not having been aware of  such a thing as a debit bureau. I mean, I assumed banks ran their own analysis to determine whether they should allow somebody to open a checking account, but I didn't realize there was a whoie cottage industry around the debit business!

Re: Oh what a tangled web...
  • 8/14/2012 10:10:58 AM

You're right - these smaller CRAs can affect everything from check cashing to car insurance rates, the ability to obtain property insurance and a host of other things. We'll keep you updated about them.

Re: Oh what a tangled web...
  • 8/14/2012 10:08:55 AM

We're so conditioned to think only about the Big Three Credit Reporting Agencies (Experian, Equifax, TransUnion). It's mind boggling to consider all the other smaller CRAs and the impact they have, often silently, on our lives.

Oh what a tangled web...
  • 8/14/2012 10:05:08 AM

Geez! That is one heck of a maze--and a very substantial amount of data in potential reach of these co-mingled companies.