Systems for Reporting Bad Checks
If you write a bad check, there are several places you could be reported to. A customer that bounces a check one time need not worry. Chances are the bank will put the check through a second time, which gives you time to acquire the funds needed for your account. Those who habitually abuse their checking account privileges should worry about the consequences, however. They will incur a substantial amount of fees, depending on the situation.
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Chex Systems
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If you write bad checks and incur fees, consistently, such as overdraft and non-sufficient funds, your account could be reported to Chex Systems. This is a company that compiles a data base of individuals who have either incurred a number of fees or practiced some type of fraudulent or unethical behavior pertaining to their checking or savings account. If you did not pay fees on your account, you could end up at Chex Systems.
Time Frame
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Chex Systems will keep you in their data base for five years. Once you are at Chex Systems, some banks will not allow you to open a checking or savings account until you have paid the fee and the five-year limit has elapsed. There are some banks that will allow you to open an account if you pay the fees even though the five year time limit has not expired. The policy will vary from bank to bank. When you attempt to open an account, a bank representative will call Chex Systems and give them your personal information. If there is a match, you will not be allowed to open a bank account.
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Check Recovery
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Some companies will turn your information over to a check-recovery institution. They will monitor your account several times per month to see when you have money available. As soon as there is money in your account they will do an electronic transfer to remove the funds plus any fees you may owe. A company of this sort has a high rate of success when it comes to retrieving fund to cover a bad check.
Status Reports
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Check recovery companies normally provide the merchant with status reports which allow them to track their NSF checks. By accessing the report, they can see the number of checks outstanding and which have been collected. This helps a merchant gauge the effectiveness of the collection activity.
Customer Contact
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A check recovery company will make attempts to reach the debtor by phone and written correspondence prior to using an electronic transfer to collect funds. A company of this sort will handle all collection efforts for a bank or merchant. Any type of communication with the customer is done by the check-recovery company. They try to keep all levels of contact professional and treat the customer with respect. A merchant may want to continue doing business with a customer in the future, even though they presented a bad check and the check recovery company does its best to keep the relationship in tact.
In House
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Banks and other merchants have their own in-house systems that allow them to report bad checks. A bank manager will receive a report each morning that allows them to see the number of checks that have been returned for NSF. Some type of contact is made with the customer, usually written correspondence, to inform them of their check status. The letters can be generated from the home office.
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