Verifying checks...whose responsibility?

Here’s another one I’ve been asked to brainstorm and would appreciate input.

We have recently had such a rash of returned checks, that the owner has implemented a processor that will allow us to instantly see if the check or driver license is approved via computer.

The problem we’re having is that the order takers are not asking for the method of payment in an attempt to avoid talking to the customer about verifying the check first, and leaving it to the delivery driver to verify it when they arrive on the location.

I am kind of 2 sided on the issue.

I feel that we should verify the validity of the check before we ever make the pizza, however, whose to say that once the driver gets to the location, that the check isn’t a different check or account that someone knows is bad.

So, if you have this situation, how do you handle it? All input is greatly appreciated!

Simple, Don’t accept them. I’ve never accepted a personal check in 10 years.

With everyone having debit cards now, you shouldn’t have to take them anymore.

How does your verification system work? How does the driver “verify” the check at the door?

I think it’s essentially impossible to verify checks on delivery. Verification systems work by searching a database of routing and account numbers that have been reported to have bounced a check. It does not verify funds in the account.

What that means is that the customer can give you their routing number and then just make up an account number. With a fake account number, there is very little chance of it being in the database as having bounced a check. I’m guessing here, but I imagine that check verification services do not allow you to verify the check without physically seeing it anyway.

Your driver could call in when he gets there and get a verification, but that would be a PITA. Plus, if it comes back as bad you’ve already made the pizza and sent the driver anyway.

I really don’t think it’s realistic to attempt to verify checks on delivery orders. All said, I have to totally agree with RobT - stop accepting personal checks. Anybody claiming to only have checks and no debit card is probably getting ready to write you a bad check.

I only have checks and don’t have a debit card and I can guarantee you that I’m not going to write any bad checks. I personally don’t like a debit card for my purchases and would rather write a check.

We accept checks and get quite a few of them. Luckily our bounced check rate isn’t too bad, but we also use a company that will guarantee the bounced check up to $30 – so we pretty much get paid for our bad checks and it’s up to them to try and collect from the customer.

I can guarantee you that I’m not going to write any bad checks.

That is the first thing a bad check writer will tell you.

What is a “rash” of bad checks? Were they all from a couple of customers? We have been taking checks for 10 years. The worst Year that we ever had, we lost about $400 in bad checks. Most years it is about $200.

Any way you slice it, it is a LOT less expensive than taking credit cards which cost us more like $350 per MONTH. In our worst year for bad checks they cost 1/4 of what CC cost to take.

We use a collection agency. They bad checks go directly to them from the bank. They generally collect about 50% of them. We write the order number on the check so we have the address and phone number from that order in the POS if we need to dig it up.

Take your bad check losses and divide them into sales paid by check. If the % is less than you are paying for credit cards, stop stressing about it and move on. This is one of those things that can bug you to the point that you spend more time on it than makes sense.

On the other hand, if bad checks are greater than credit card fees where you live, I would consider stopping taking them (and make exceptions for regular customers if you want to).

How could this ever work for deliveries? Are you going to have the driver call back to the store with the check information? What a PITA that would be.

Either take checks or don’t. Don’t screw with any third party “verification”.

Yes, that’s EXACTLY what is happening…because the order taker doesn’t ask what method of payment the customer will be using, the drivers ARE having to call in and verify the check before handing over the order.

Bad business, IMO.

With the exception of my 72 year old mother, who does NOT have a debit card (is fighting all that new fangled technology for as long as she can haha) and has never written a bogus check, I completely agree with the sentiment of the “no debit card” or “new account” line going to write you a hot check, especially if they are younger people.

But, on the flip side, I feel it to be completely rude to ask someone how they are going to pay and then ask to verify the check over the phone.

IMO, but this is ONLY my opinion, I say take the check, write down all the pertinent information, and hope it clears.

Since the economy really soured, we’ve seen about a 25% increase in returned checks, and it’s getting very costly, quick!

One thing I have learned is that most returned checks have low check no.s. If you get a higher check number, like 3k or 4k, it is most likely ok.

I started thinking one day that most bad checks are from newer customers. Some of them I call opportunists. So, I instituted a rule that if you have ordered 6 times or more, you may write a check.

For me, at least, it’s not that someone wrote me a bad check or that the % is less, it is the fact that someone intentionally tried to hornswaggle me out of something. We are all scared that it is going to happen a lot. We just need to have simple rules in place that allow us to follow a set procedure.
I ask for a drivers license, 2 phone no.s and a date of birth. I have never had someone refuse to provide it.

You can order checks starting with whatever number you want. Last time I changed banks I was asked what check number I wanted to start with. I said number 1. The woman looked at me like I was an idiot and said no one will take checks from you, start with 3001.

Sentence one and sentence three written in the same place by the same person is absolutely ludicous. If there is a 25% increase in business losses, then “rude” doesn’t enter into anything. “Rude” has to do with one person’s view of social niceties . . . Business is not about social and preserving the business is a far greater priority. I wrestled a few moments and tried to figure out how a business EXTREMELY vulnerable to account fraud asking a customer their form of payment and verification is completely rude. I never got there. Where I got was the absolute creation of a target for massive losses to theives. “Call PJ’s; they don’t verify accounts, so those stolen checks are worth real money there.”

We have a mindset similar to Bodega in that the losses are not welcome, but the percentage is small. We work the intial contact and warrant process, and have collected our costs plus some whenever they pay up. The very few that never paid cannot equal 1% of our total check business.

We took checks the first 2 months we were open… and got 3 returns. I then stopped taking them and in 3 years have only had about 6 people or so complain about it… which then used their credit card to order.

Whenever a delivery is called in, at the end of the order we ask Cash or Charge… if it’s charge we do it over the phone and print the slips for the customer to sign when they recieve the food. No one has ever gotten upset or even hinted at it.

I would also like to mention that even though we ask them Cash or Charge… we have had 2 or 3 people say Cash then when the driver got to their house they tried to pay with a check. They then the driver a credit card so he can call it in and they can sign the recipte. Why some people think “cash” and “check” are the same thing, i’m not sure :roll:

Nick, that’s why, if you ask me, we should not take checks.

It used to be that most of our business was debit or credit card or cash.

Once things started bottoming out, we saw an increase in checks, then returned checks, which led to the boss wanting me to brainstorm new ideas…OTHER than not accepting checks.

He wants to accomodate everyone…but I’m on the mindframe that nice guys finish last. But, we’re in customer service, so what may seem like a simple solution outside the store may not always apply inside the store, hence me coming here for ideas.

Here’s how we do it and have not had a bad check since… I use a third party check verification called Telecheck. When a customer insists on writing a check, we tell them that we need to do a check verification which requires them to read the full number from the bottom of the check and their driver’s license number. Telecheck will verify the validity of the account and give an approval number (or denial). We ask the customer to write the the approval number above their name on the check. When my driver gets to the home, the check must have an approval number or it’s not accepted (and the customer does not get his food… that’s never happened). But Telecheck has come back with several denials that I’m sure would have resulted in bounced checks if I wasn’t using their service.

I think I’m paying like 30 cents per transaction. One bounced check would pay for like 6 months of transactions, so it’s totally worth it to me.

No dis intended. But, didn’t you say you were getting shoved out the door by getting hours chopped off? Had a crisis of trying to decide if you going to stay on or not since you had no respect or support from ownership, injury recovery and all that?

And now you are figuring out a solution to what appears to be lack of business sense that is starting to cost money? I really don’t understand what happens inside the doors of that shop. :?

As best I can caluclate, Our bad check lossses are in the area of 1/3rd of 1% of check sales. (.003). As previously stated, that is a lot less than our credit card fees.

for us this is not an area worth spending a lot of time on or ANY added complexity to process.

Figure out the real cost. That will lead to a decision process relevant to your situation about how to handle it.

This is certainly a viable step in ensuring a check is valid. My initial thought on this is that a person having to go through the extra steps, would do so THIS time. They have already spent the time to go thorugh the order process etc. I would be interested to see the data you have on repeat business…ie. do the people who pay with a check order again and pay with a check???

I would have to agree with Nick on his comments about not accepting checks. What are your competitors doing? Are they accepting checks? If not, what is the harm of joining their ranks, after all a sale to a bad check is really not a sale at all.

Long story short, they “say” they value me and wanted to prove it by letting me become involved with a lot of consulting and “sit down” stuff while I heal my back.

Sure, they could simply be using me…but in this economy, with my education level (some college, but no degree yet), I’d be swapping one set of problems for another in food service…so I’ll keep quiet and “use them” back…haha

But remember that a sale to a check that is not bad is a sale that may not have happened if checks were not accepted. Many here argue that everyone has a debit card but this just simply is not the case. I for one haven’t seen the debit cards attached to any of my bank accounts since they were mailed to me. I guess that my wife has them filed somewhere but they have never been used.