If you’re a merchant worried about being defrauded by bad-check writers or identity thieves, you can get help from check-verification companies, which can reduce (though not eliminate) the chances you’ll sell to a customer whose check is no good.
Problem is, if you’re an honest customer seeking to do business with one of these merchants, there’s always the chance one of the merchant-protection services will incorrectly judge you a fraud risk, in addition to the standard risks of computer glitches, database breaches, and other problems that can vex anybody in today’s computerized economy.
We know this because of complaints from consumers who’ve had bad experiences trying to buy from merchants who subscribe to Telecheck; the complaints boil down to, “I tried to pay by check and Telecheck declined it, even though I had more than sufficient funds in my account.”
Larry from Illinois says, “We were denied a check at Walgreens (where we have an account) due to TeleCheck’s profile. We went to the bank and they called TeleCheck to tell them we had plenty of money in our account. TeleCheck said it didn’t matter how much money we had in the bank, their statistical profile found something else. That ‘something else’ was that we don’t write many checks (true) and we were trying to write two in one day. The fact that the bank said there was money in the bank meant nothing to them. They said we shouldn’t write checks for seven days (it’s Christmas season!).”
Another consumer states, “I have tried to buy groceries 3 times and been turned down 3 times by Telecheck. I called Telecheck from my bank they, said write smaller checks. I did once and that was turned down. I am so frustrated. What can I do to get a check through for food from Meijers and Walmart?”
When a merchant such as a grocery store submits your check through Telecheck, it is analyzed and reviewed for evidence of unpaid checks, fraud and other factors that present a red flag for merchants.
Telecheck may return a code “3” back to the merchant, signaling the transaction contains a significant level of risk markers. This may occur even if you have sufficient funds in your account. Telecheck does not determine the balance of your account; it only analyzes the level of risk of a transaction.
We read Telecheck’s FAQ page to determine why people like Larry had their purchases declined, and found this:
You have more than enough money in your account to cover the check. Why did you get a Code 3?
In most cases, TeleCheck did not perform a funds check on your account at the point-of-sale, and your account balance was not weighed into its risk decisioning. The transaction carried risk indicators independent of bank balance.
You’ve never written a bad check or do [not] write them very often. Why did you get a Code 3?
Evidence of prior bad check writing history is not determinative in how a risk model ultimately decisions on a check transaction. The transaction carried other risk indicators. Also, when your transaction was analyzed, it probably had several characteristics that made it look risky. In fact, if the account number was rarely, or never seen by TeleCheck before, this in itself could be a factor in a decision to decline.
According to Telecheck, “For any decline, you should have received a written notice providing information about the decline, including how and where to receive more detailed information. You have a right to know what is prohibiting merchants from accepting your check.”
Common reasons for a check being declined by Telecheck
1. Too many risk factors. The transaction carried other risk indicators. Basically once the transaction was analyzed; it had several characteristics that made it look risky.
2. Insufficient information in your file. You write very few checks which in and of itself makes you a risk factor; meaning they do not have sufficient information on you to make a decision to accept your check.
3. Fraud. At some time you may have reported fraud to your bank or the police. A report of fraud about your bank account, even if you made the report yourself, may cause your checks to be declined in Telecheck. For instance, your check book was stolen and you reported a range of check numbers to the bank so they would know not to honor those check numbers. A fraud report to your bank may have been submitted to Telecheck also.
4. Identification. Your driver’s license number could be used, unbeknown to you, in fraudulent activity such as cashing checks on other accounts. If this occurs, your driver’s license number or identification can be “linked” to those bank accounts and subsequently to your bank account.
5. Previous history with Telecheck. Prior debt on file with Telecheck, even if paid, can still affect your check writing privileges.
6. Unpaid Debt. There could be a current unpaid check or unpaid bank account debt causing Telecheck to decline your checks.
7. Other risk variables. You may have been declined based upon risk variables which are not based on evidence of unpaid debt. There can be 100s of variables active within a risk model and the risk-based decisions it generates.
8. Cashier error. The data at Telecheck links you to another check writer’s data which is negative. This may happen if information on an identification card or driver’s license is misprinted, a cashier may have miskeyed the numbers on your identification or there are multiple check writers linked to a single account and one of them has a negative Telecheck record. TeleCheck can “unlink” these inaccurate links once they are discovered by you.
You are entitled to a free copy of your Telecheck Report
Telecheck is a consumer reporting agency making you entitled to an annual free report. And, if you have been denied service based upon information in your Telecheck report, you are entitled a free report.
The only way to get to the bottom of why your checks are being declined is to see what information is contained in your Telecheck report. Once you get your report you can dispute incorrect information and errors which may exist.
The best way to get your Telecheck report is to write them
TeleCheck Services, Inc.
Attention: Consumer Resolutions-FA
P.O. Box 4514
Houston, TX 77210-4514
To verify your identity, Telecheck requests the following:
(1) a daytime contact phone number
(2) a copy of your driver’s license
(3) your social security number
(4) a voided check (We do not recommend giving them this piece of information as it is unnecessary to verify your identity and none of their business)
(5) a copy of a tax or utility bill reflecting your current address
You can also call Telecheck at 1-800-366-2425 to get your free annual file disclosure pursuant to the Fair Credit Reporting Act.
Once you have your Telecheck report, follow these steps:
Dispute. Once your report is received, you will be able to see exactly what information exists about the outstanding debt. If the information does not ring true you can dispute it. The information may not even belong to you; it could be one huge mistake or worse, identity theft.
Investigate. Once you dispute the information an investigation will be opened and Telecheck will have 30 days to verify the information as accurate. However, if you get the free Telecheck report under the Fair Credit Reporting Act, it extends the investigation time period to 45 days. The investigation process works something like this:
(a) Telecheck may verify the information with the company that reported you to Telecheck as correct. In this case the information will remain in your report.
(b) Telecheck may be unable to verify the disputed information in such case the information must be deleted.
(c) If the disputed information is verified you have the option of sending a letter requesting the method of verification. Once your request is received, Telecheck must tell you how they verified the information as correct. They have 15 days to send you the address and telephone number of the business they contacted to verify the information. You can then dispute directly with the business that furnished the information to Telecheck. You can also dispute directly with the furnisher of the information.
Information can remain in Telecheck for 7 years. After 7 years, even if the debt has not been paid, they must delete the information. Additionally, Telecheck will remove the negative information from your files if you pay the debt.