Advice for Retailers

Avoiding Bad Checks

Retailers lose $12 billion a year to bad checks with over 450 million bad checks being written. Here's how you can avoid being victimized by bad checks.

As a small business owner, it's easy to fall prey to con artists who write bad checks and use them to buy your merchandise.

Winning the battle against those who pass bad checks is largely a matter of knowledge and vigilance.

You have to know what you're up against, pass the information on to your employees and be constantly on guard when accepting checks.

Here are some recommended processes for accepting checks:

  • Watch the Check Being Signed. Be sure the person signs the check in your presence.
  • Inspect the Check. Look over the check carefully, making sure the date and amount are correct and clearly written. Require that the person's address and telephone number appear on the check. Do not accept checks with hotel addresses, post office box numbers or other temporary addresses. Be extra careful when accepting checks from out-of-town banks and non- or low-numbered checks. Avoid checks with crossed out or rewritten marks. Never accept checks that are post-dated.
  • Require Identification. After looking at the check to see if it seems legitimate, there is still an open question as to whether the person holding the check is the right person. Requiring identification helps you to answer the question. If you are offered a driver's license, write the I.D. number on the check and make note of the person's physical appearance.
  • Compare Signatures. Regardless of the type of identification you require, it is essential that you and your employees compare the signature on the check with the one on the identification. You should also compare the person standing before you with the photograph and or description on the identification.
  • Set a Check Cashing Policy. You should set a policy for cashing checks, write it down and instruct your employees in its use. When all checks are handled alike, customers have no cause to feel that they are being treated unfairly. Your policy might require that you approve checks before they can be cashed or that only checks under a certain amount will be accepted.
  • Call the Bank. If the check is for a large amount or there are reasons to be suspicious, call the bank where the account is held. The bank can validate the account and the amount of the check.
  • Record the Moment. Criminals are camera shy. A security camera focused on your checkout counter will deter would-be scammers. Nobody wants to be featured on YouTube writing a bad check.

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