Green’s Dictionary of Slang

chat v.2

[chats n.2 ]

to search for lice; thus chat-up n., a search for lice.

[Aus]Gippsland Times (Vic.) 27 May 3: One of the forced pastimes of the soldier is ‘chatting for chats’.
L.N. Smith Lingo of No Man’s Lnd 20: CHATTING Name applied to the indiscriminate hunt for petit friends called ‘cooties,’ ‘trouser-rabbits,’ etc.
[Aus]W.H. Downing Digger Dialects 16: chat (vb.) — To examine clothing in order to remove lice.
[UK]N&Q 12 Ser. IX 424: Chat-Up. A spell of killing vermin.
[Aus](con. WWI) A.G. Pretty Gloss. of Sl. [...] in the A.I.F. 1921–1924 (rev. t/s) n.p.: chat. The vermin that infested clothing, blankets & Dug-outs. To search clothing for Chats.
[Aus]R. Rivett Behind Bamboo 395/2: Chat, (to), to delouse. Chat happy, weary of delousing clothes, etc.