What is '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.

BREAKING DOWN 'Negative Verification'

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.

Why Banks Need Correct Customer Information

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.

  1. Positive Confirmation

    Positive confirmation is an auditing inquiry concerning the accuracy ...
  2. Customer Service

    Customer service is the process of ensuring customer satisfaction ...
  3. Customer

    A customer is an individual or business that purchases the goods ...
  4. eIDV (Electronic Identity Verification)

    eIDV (Electronic Identity Verification) is the use of public ...
  5. Customer Relationship Management ...

    Customer relationship management (CRM) is a term for the principles, ...
  6. Address Verification Service - ...

    Address verification service (AVS) is a tool used by credit card ...
Related Articles
  1. Personal Finance

    What is Fractional Reserve Banking?

    Fractional reserve banking is the banking system most countries use today.
  2. Tech

    The Pros And Cons Of Internet Banks

    Learn how internet banking services stack up against their brick-and-mortar peers. Find out what internet banks have to offer and where they fall short.
  3. Personal Finance

    Banking Has Changed: What Does It Mean For Consumers?

    Banks have long been leading spenders on technological innovations. Learn the key changes in the banking industry and what institution is right for you.
  4. Insights

    Identity Theft: Who To Call For Help

    If your identity is stolen, it's critical to act fast. Find out what to do if it happens and who to call.
  5. Insights

    How to Protect Your Assets From Cyber Thieves

    Taking these precautions can keep you a step ahead of identity thieves and fraudsters.
  6. Insights

    5 Overlooked Places Where Your Identity Can Be Stolen

    Identity theft affects many Americans, and are often caught off guard. These are 5 places thieves target.
  7. Insights

    The World's Top 10 Banks

    Learn more about the world's largest banks and how more financial power shifts eastward as China is home to four of the world's largest banks.
  8. Investing

    This Stock Correction Is Now the Longest in a Decade

    By this methodology, the 2018 stock market correction is still underway.
  9. Personal Finance

    5 Bank Fees You May Not Know About

    Banking regulations have recently changed and fees are following suit.
  1. How does a merger affect the customer?

    Learn how a merger may affect customers of the industry. The effects of mergers may be positive or negative, but there's ... Read Answer >>
  2. How do mortgage lenders verify employment?

    Discover how mortgage lenders confirm your current employment situation, even if self-employed, and learn what types of information ... Read Answer >>
Trading Center