Negative Verification

Negative verification is a system of confirming that a bank's records agree with a customer's records. The bank contacts the customer to provide specific information about the account. The customer is asked to respond only if the information is incorrect; otherwise, it is assumed to be correct. For example, the negative verification system process may be completed by sending the customer a letter, with a request to reply to alter incorrect information; if the customer doesn’t reply, the information is assumed correct and is not altered.

Negative verification is a process by which the absence of an action is considered verification of the information in question. This is because the customer is not required to do or say anything if the information is correct. The customer is only required to respond to verify when information is not correct. The onus of negative verification is on the bank to contact the customer when the need to verify specific account information arises.

Negative verification is the opposite of positive verification, whereby the customer must contact the bank to verify that the information is correct. For example, if a customer suspects that a fraudulent transaction has been posted to his or her account, he or she will contact the bank in order to verify that his or her account information is correct, and to dispute the charge if necessary. If a customer believes his or her bank has made an error and the bank disagrees, he or she can contact the Office of the Comptroller of the Currency to try to resolve the problem after trying to have the bank resolve it directly.

Another example of positive verification might be if the customer changes his or her address and contacts the bank to verify that his or her address information is updated and complete. In either case, the onus is on the customer to contact the bank and verify that his or her information is correct.

Negative verification may be used to verify a customer’s identifying information. Banks need correct customer information as part of the know your customer (KYC) process of verifying the identity and spending habits of their clients. This can keep the bank from becoming involved, inadvertently or otherwise, in money laundering or other criminal activities. It can also help the bank protect its customers from identity theft and fraud by understanding their spending habits. Banks can also use information about their customers to understand which products and services might be best for them.