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Many of us at one time or another have “bounced” a check. In the majority of cases this means that the check writer made some type of mistake, such as a math error in their checkbook or they mistimed the arrival of funds that were supposed to cover the checks written. These checks are referred to as NSF (non-sufficient funds). When this happens your financial institution will return the check to the merchant to whom you wrote the check and subtract that amount from their checking account. These checks are a labor intensive and costly transaction for both the bank and the merchant holding the NSF check. This process is also costly for you. Not only will your financial institution charge you a fee but the merchant also most likely will charge you a fee. These fees reflect the costs involved in collecting these funds. In the past to make this check good you would have had to bring the merchant cash or a money order to be reinstated to good credit status which would have removed your name from the “negative database” check verification services. This process was time consuming and awkward for the merchant and embarrassing for the check writer. Electronic makes this all much easier on you.
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Is it legal for the merchant to charge a fee for bouncing a check? Yes, the fees vary from State to State but are usually $25.00 - $35.00 plus bank fees
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What does it mean for a merchant to have an electronic check
collection policy? This means the merchant, rather than manually putting bounced checks through their bank a second time, have retained a firm to convert these checks to electronic transactions and automatically debit the bad check writer’s account.
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Can the store legally debit my account for the bad check and
bad check fees? The merchant can automatically debit your account for the face amount of the check and the state allowed fees as long as they have posted notice of this policy at their place of business or on literature provided to you and gotten your authorization.
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What happens if I find my
bank error and pay off the merchant while the check is in its electronic
redeposit process?
You can sign a form at your bank saying
your check was paid and they can credit your account.
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How does the electronic
redeposit appear on my bank statement?
Your statement will say “redepcheck” as well as the name of the
merchant and the check amount
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How does the electronic collection of bad checks work? We use the latest electronic technology to automatically debit the bad check writer’s account. The process works like this:
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If you collect the check
how much do I receive? You always receive 100% of the face value of every check we collect. The Merchant may also receive more than 100% depending on the program they have qualified for.
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How much does the
service cost? The service costs you absolutely nothing. It's FREE There is no set up fee, no monthly fees and no maintenance fees. We make our money from the state fee that is collected when we collect the check.
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This sounds too good to
be true, is it legal?
Yes, it is perfectly legal. There was a ruling by NACHA, the agency that
regulates electronic commerce, in March of 1998 permitting the electronic
collection of NSF checks written by consumers.
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How is the customer
notified that this debit will occur? When you sign up with us we send you a welcome package that contains stickers for your doors and registers. These stickers inform the check writer that if their check comes back NSF it will be electronically debited from their account along with the state allowed fee. We also send each check writer a notice letter before their check is redeposited. If you are not a retail operation we detail how to notify the customer.
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How many times can you
try to debit the account? Electronically, we get one more try than you do with a paper check. This means that after the check bounces the first time we still have two additional attempts to debit the account.
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What happens if you cannot collect the check electronically, or if the account is closed?
When this happens you have two choices.
You can have the check returned to you or we can turn it over to our
traditional collection agency partner, which specializes in small dollar,
personal consumer bad check collection. If the check is collected in this
way you still
receive 100% of the face value
of the check.
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