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Check Processing & Payments Information

6 Tips To Reduce Bad Checks Without A Verification Service

Posted by Kris Coughtry | Tue, Aug 06, 2013 @ 10:00 AM

writting a check


The sign is up, the inventory is in, your staff is trained. You’ve done it - you’ve opened the doors to your new retail store and are ready to welcome customers. As a new business, in addition to forecasting sales and stocking shelves, you’re probably thinking about what payments to accept. For some business owners, it may seem that the best way to avoid the risk of a bad check is to not accept checks at all. But to do so means fewer sales and fewer customers, not exactly the best way to start off a new business.

Maybe you’re considering a verification or guarantee service but aren’t quite ready to make a decision. Even without a check service in place, there are basic steps a store can take to reduce the risk of accepting a potentially bad check.

Here are some things to keep in mind:

  1. Always ask for identification and compare signatures. Acceptable ID should be limited to current and valid driver’s licenses, state-issued identification cards and military ID.
  2. Check the name and address on the check and compare it to the ID. They should match. Ask for more information if there is a discrepancy. 
  3. Don’t accept postdated or third party checks. The check should be written out with the correct date and made payable to your business. Collecting on a check made out to another party will be very difficult.
  4. Be wary of counter checks or check numbers under 100. Checks drawn on new accounts can be risky - new accounts may not be established long enough to reveal unreliable check writing history or account activity. Counter checks do not have an imprinted name or address which makes it harder to confirm that the check writer is the account holder.
  5. Confirm the check is made out clearly and correctly. Seems obvious, but an error in how the check is written, mismatched amounts, for example, may cause it to be rejected by your bank. 
  6. Make sure the check has not been tampered with and is not altered. Alterations to the check may indicate a fake or forged check. For more information on what to look for, see our Tips to Spot Fake Checks sheet.

These basic steps can be effective in helping you maintain a customer–friendly check policy and will most likely keep many bad checks at bay. For most businesses, checks are a safe, reliable and affordable payment method and turning down checks is equal to turning down sales.

For businesses that prefer a higher level of protection, a check verification or guarantee service is recommended. When using these services, check information is submitted to the verification company by phone, payment terminal or online. The information is checked against established databases and the check provider recommends the check or the alerts the merchant if the check is outside recommended risk factors. 

Guarantee services go the extra mile by providing reimbursement on checks that are returned by the bank, most often for NSF reasons, provided all warranty guidelines are met. Check guarantee services can also give you payment options to offer your customers. A Multiple Check service, for example, can be a great alternative to lay-away. Not only do guarantee services help you maintain cash flow, but they relieve you and your staff of having to collect on the bad check, often an unpopular and uncomfortable task.


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Topics: Check Fraud, Check Verification

Written by Kris Coughtry