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Published: Jul 14, 2022 18 min read
Illustration of a person being followed by many eyes and objects that imply consumption.
Rangely García for Money

Liam Downey remembers the first time he heard about ChexSystems. It was December 2021, not long after he moved to Mancos, Colorado, a tiny mountain hamlet with a population under 1,500.

The only bank in town had just barred the 52-year-old flight paramedic from opening an account because his so-called ChexSystems score was too low. The teller gave him the contact information of the agency but not much else. He walked out of the bank perplexed.

ChexSystems, as Downey would soon find out, is a national consumer reporting agency — abbreviated CRA — that specializes in gathering data on how Americans use checks and bank accounts. It distills this information into a score similar to a credit score. Some 80% of banks rely on such information to screen people who want to open new accounts.

On a scale of 100 to 899, Downey’s ChexSystems score was 553. As far as the sole bank in Mancos was concerned, those three digits — regardless of his 15-year-long relationship with his current out-of-state bank — meant he was too risky to take on as a customer.

“I think this is complete nonsense,” Downey says of the reporting system. “People don’t even recognize it exists. It’s not easy to interpret, it’s not easy to change, and it’s completely arbitrary.”

Critics of ChexSystems note the agency generally tracks only negative information like account closures and overdrafts, essentially making it a bank-account rap sheet. The company is just one of a large — and largely unknown — sum of CRAs that actively monitors the financial and nonfinancial behavior of more than 200 million Americans, including many children.

Rangely García for Money

Most of us are familiar with Equifax, Experian and TransUnion, the big three credit bureaus behind our credit reports and scores.

But that’s barely scratching the surface.

“There is a very large web of these different types of consumer reporting agencies,” says Ariel Nelson, a staff attorney at the National Consumer Law Center (NCLC) who specializes in consumer reports.

Nobody knows exactly how many agencies there are because there’s no federal registry overseeing them, Nelson says. Her best guess? It’s likely in the thousands — at least.

Our ‘financial surveillance’ system

Rent a home. Bounce a check. Return an item to a retailer one too many times. Miss a utilities payment. Make a utilities payment. Change jobs. Apply for health or property insurance. Get a raise.

In any one of these everyday scenarios, there’s a good chance your information is being logged, cross-referenced, bought, sold and scored among a sprawling network of consumer data brokers. And that data can be used against you when it comes time to apply for a loan, land a job, rent a place to live and even innocuous things like sign up for a new phone plan.