Experts Say Your Financial Past Could Easily Catch Up With You

NEW YORK (CBSNewYork) — Bounced checks and forgotten overdraft fees can happen to anybody. But now, some banks are using those money mistakes against customers.

Natasha Carmon pays her bills by driving to businesses and paying with cash or a money order. Carmon would rather send checks but she doesn’t have a checking account. She doesn’t have a checking account because she has apparently been blacklisted by the banks.

“They all denied me and they all said that it’s because you owe this bank X amount of dollars,” she told CBS 2’s Alice Gainer.

Thousands of people have been shut out by the banking system because of relatively small mistakes that they have made in the past, according to consumer advocates.

“The fees just got so extreme that I couldn’t keep that up,” Carmon explained.

Unpaid fees for things like bounced checks led to an involuntary closure of her account four years ago. Today, no bank will accept her as a customer.

The banking industry admitted to keeping track of consumers like Carmon using a pair of reporting agencies called Chex Systems and Early Warning.

“It’s a good indication of whether the person can manage the account and whether what risk they present of causing the bank to lose money,” American Bankers Association spokesperson Nessa Feddis said.

As many as 65 percent of new checking account applications are denied by banks due to spotty financial histories, according to a recent survey by the Federal Deposit Insurance Corporation.

Consumer advocates said that some of the people being shut out have records that were dinged accidentally.

“There could have been an automatic payment that the consumer had cancelled, but the company by mistake continued to try to take out of their account, and that is happening more and more often today,” Ed Mierzwinski said.

Federal law allows consumers to request free banking history reports every year to dispute incorrect information.

For now, Carmon will have to continue to hit the road to pay her bills.

“I don’t like it, but that’s the option that I have,” she said.

The American Bankers Association told CBS 2 that banks won’t report customers who overdraw their accounts if they address the issue right away.

Customers who do not pay overdraft fees could have trouble getting accounts in the future.

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