Banks across the United States are distancing themselves from the unscrupulous payday lending industry by cutting off lenders’ access to a database of customer account information used to assess potential borrowers.

Bloomberg News reports that Early Warning Services LLC, a large database of consumer financial information owned by Bank of America, JPMorgan Chase, Wells Fargo, BB&T and Capital One Financial, is in the process of severing ties with payday lenders in order to avoid unintentionally facilitating fraud or other illegal activity.

Nearly half of the consumers in the U.S. with bank accounts are tracked by Early Warning Services, with hundreds of banks using the database as a way to prevent fraud by sharing customer data.

In the past, payday lenders – who access the data through alternative credit bureaus – have used the information to select potential borrowers by reviewing their credit scores and observing how their accounts are used.

People with direct knowledge of Early Warning data usage tell Bloomberg that the data is more useful to the short-term lenders than credit reports because most payday loan borrowers have low scores anyway.

Beginning last year, Early Warning Services began asking alternative credit bureaus to stop sharing the database’s information with lenders that charge high interest rates to make sure the company isn’t party to any potentially illegal activity.

“We’ve been discontinuing service one by one,” Kyle Thomas, chief of marketing and sales for Early Warning, tells Bloomberg. “The way we’re going through it reflects both the wishes of our data contributors as well as various regulators.”

Early Warning Service’s move to discontinue its relationship with payday lenders falls in line with regulators’ “Operation Choke Point” campaign, which has put pressure on banks to stop dealing with such short-term lenders.

A former employee of Early Warning says it doesn’t come as a surprise that the company and banks would want to distance themselves from the often predatory lenders.

“The use of their data is very strictly limited,” the former employee tells Bloomberg. “If there is a perception that there is reputational risk or potential harm to consumers that could come from the use of that data, the banks tend to be very sensitive about that.”

Bloomberg reports Early Warning Services was used by several payday lending companies that have recently faced scrutiny from federal and state regulators.

One such user was Think Finance Inc., the company behind company behind a number of payday loan-like lenders including RISE Credit. In November, the company was sued by Pennsylvania’s attorney general for allegedly using tribes as cover for an “illegal payday-loan scheme.”

Sources also tell Bloomberg that Carey Vaughn Brown, who was indicted last year in New York for allegedly conspiring to make illegal loans through offshore companies, also accessed the data.

Banks Stop Selling Account Data to Payday Lenders [Bloomberg News]

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