(Reuters) - Citibank, a unit of Citigroup Inc, has reached an agreement with New York Attorney General Eric Schneiderman to change its screening processes for checking and savings accounts to be more forgiving of customers’ histories, the Wall Street Journal reported.
Schneiderman's office said the requirements previously in place often hurt low-income applicants and forced them to turn to high-cost alternative financial services, the newspaper reported. (on.wsj.com/15MD9ys)
The new rules, scheduled to begin March 15, will change how Citibank uses information from ChexSystems, a database that provides data on how consumers handle deposit accounts at banks.
A consumer’s ChexSystems report typically contains banking irregularities such as check overdrafts, unsatisfied balances, depositing fraudulent checks, or suspicious account handling.
Under the agreement, Citibank will modify its screening criteria and only decline applicants if they have two or more reported incidents of account abuse in recent years, the newspaper said.
The company plans to make an announcement on Wednesday, the Journal reported.
With this Citigroup becomes the second financial institution to reach such an agreement.
Last June, Capital One Financial Corp had agreed to fundamentally change the way it uses ChexSystems to restrict only customers who land in the database for fraud.
Representatives at Citigroup and the New York Attorney General could not be reached for comment outside regular U.S. business hours.
Reporting by Luke Koshi in Bangalore; Editing by Gopakumar Warrier