Santander agrees with N.Y. AG to change screening procedures

(Updated, 12:55 p.m.)
NEW YORK – Santander Bank has reached an agreement to change the way it screens applicants of checking and savings accounts amid concerns the current practice is slanted against low-income consumers.

The agreement, reached with New York Attorney General Eric T. Schneiderman, was announced Friday. Santander will adopt new policies governing its use of ChexSystems, a consumer-reporting agency that screens applicants. Schneiderman alleges the current system adversely affects low-income applicants.

The attorney general expects the new policies to be implemented by Sept. 30 and will open the door to more consumers nationwide looking to open bank accounts.

“No one should be denied a bank account because of a bounced check from years ago,” Schneiderman said in a statement.

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Santander now becomes the third bank to agree to the new policies, joining Capital One and Citibank. The attorney general alleges the database “disproportionately affects lower-income Americans, often punishing them for relatively small financial errors,” which prevents consumers from conducting their day-to-day financial transactions.

The current system, Schneiderman says, pushes consumers toward alternative banking services making them more vulnerable to theft and predatory lending practices.

“Denials like these force low-income Americans – and New Yorkers in particular – to resort to high-cost alternatives to banks, simply because of the small financial misstep in the past,” Shcneiderman said.

Santander will continue to screen customers for past fraud, but will put reduced scrutiny on applicants who’ve been rejected for “minor banking errors,” according to Schneiderman’s office.

The bank has also committed $500,000 to publicize the agreement to low-to-moderate income New York neighborhoods.

Santander says it will implement the new policy in September and use a third-party vendor to screen applicant. Maria Tedesco, managing director of Santander retail banking, said in a statement the bank was “pleased to have reached an agreement.”

“We believe this change to the screening process for new account openings will make it easier for consumers who might have been denied services based on their banking history the ability to open checking or savings accounts at Santander,” Tedesco said.

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