ChexSystems Law and Legal Definition
Chexsystem is a credit reporting agency, providing data relating to a consumer handling deposit accounts at banking institutions. The ChexSystem provides information on mishandled checking and savings accounts to a central location. Usually the report contains banking irregularities. Commonly reported banking irregularities are check overdrafts, fraudulent checks and suspicious account handling. The reported information is shared among member institutions. The information helps the members to assess the risk of opening new accounts. Most of the commercial banks in the U.S. use ChexSystems for consumer checking and savings account application process. Banks report incidents to ChexSystems to protect themselves and other banks in the future.