Ok, I posted this in the general forum first, but it kind of got burried. For those using Chexsystems as part of your CIP, how do you handle situations where the customer is not present, say the wife comes in to open a joint account. We currently run a Chexsystems on both account holders, but we are being questioned by an auditor who says we are violating the Fair Credit Reporting act by running a report on the husband before receiving his signature on the signature card. My position is that we can run the report because we have a legitimate business purpose - the request to open the account - even though it is being requested by an "agent". I was not aware that a signature of any kind was required to run a Chexsystems report, we do not sign signature cards before running the report on a customer who is present. Any thoughts on this?

I would not call a wife an agent of the husband....
and you cannot run a check on someone without their written permission to do so.
I would not open an account without the person present either.
So, IMHO, everything you are doing is contrary to what I know to be safe banking practices!
Sorry I cannot be helpful on this...

I am not sure at all about this, but I want to say the Chexsystems report is not really a credit report. It is merely a report of transaction accounts not loans.

Thomas,
Several thoughts:

1 - CheckSystems is considered a consumer reporting agency and so the authority to call CheckSystems on anyone is governed by FCRA.

2 - FCRA does not require signed authorization to obtain a consumer report. You are authorized to pull it if you have a "legitimate business need" in connection with "a business transaction initiated by the consumer". You clearly have met this requirement if a customer comes to you to open a deposit account.

3 - Here's where I get a little fuzzy. I think up until recently, you could assume that an applicant was acting as agent for a joint applicant. This is consistent with HMDA, for example, which allows one applicant to complete government monitoring information for the other applicant.

However, with the advent of ECOA's requirements to demonstrate intent on the part of each applicant to apply for credit, I think that assumption is shifting. To my knowledge, there have not been any official pronouncements about whether you must have demonstrated intent from the individual before you obtain a consumer report, but it seems that that thinking would be consistent with Reg. B as it now stands.

However, the FTC's Statement of Policy does address the question of obtaining a consumer report on an applicant's spouse. I'm also a little fuzzy on this because I know the FTC's statements of policy pre-date the 1997 (I think) changes to the act and so are somewhat suspect. However, they are still there and this is what they say about the applicant's spouse:

5. Information on an Applicant's Spouse
A. Permissible purpose. A creditor may request any information concerning an applicant's spouse if that spouse will be permitted to use the account or will be contractually liable upon the account , or the applicant is relying on the spouse's income as a basis for repayment of the credit requested. A creditor may request any information concerning an applicant's spouse if (1) the state law doctrine of necessaries applies to the transaction, or (2) the applicant resides in a community property state, or (3) the property upon which the applicant is relying as a basis for repayment of the credit requested is located in such a state, or (4) the applicant is acting as the agent of the nonapplicant spouse .

I think either of the sections I bolded above could give you authorization, but I'd love to hear from others how they view this situation.

If someone comes in to open a joint account and only one of them is present, we open the account as a single party account, make up the signature card for the joint account and have the person present sign both, stating the reason why the two different cards. We run the person who is present thru checks systems. When the second party comes in with the required information, we will then run them to checksystems and if all is clear, we open the new joint account. The the second party doesn't clear checksystem, the account remains single party.