Tips for Avoiding Bad Checks

The best way to reduce your losses is to avoid taking bad checks from the start. The following tips are suggestions to help you establish good procedures for accepting checks.

  • Institute a check acceptance policy.
    A clearly posted check acceptance policy for your employees and customers can go a long way toward reducing your losses. Firm and courteous policies should be used to avoid bad checks and to meet the requirements of the Check Deception Program (CDP). A good policy should state which types of checks can and cannot be accepted and include the consequences to bad check writers. Take the time to educate employees to ensure that proper check acceptance procedures are being followed.
  • Confirm the identity of the check writer.
    All Identification Documents (ID) can be forged. The most reliable form of ID is that which contains a photo and a physical description. Take the ID in hand and write the ID number, birth date, address and other descriptive data such as driver’s license or social security number on the front of the check. Compare the photo from ID to the check writer to ensure they are the same person. If suspicious, ask questions. Do not accept a check if the name printed on the check is not the same as the person issuing the check. Two-party checks endorsed over to a payee will not be eligible for the CDP.  Have the employee who recorded the information and accepted the check place their initials on the check next to the information obtained.
  • Whenever possible avoid accepting checks written on a new account.
    Approximately 85% of all bad checks are written on accounts only a few months old and bear check numbers between 101 and 150. Use caution. Do not accept counter drafts/starter checks. Do not accept checks with alterations, erasures, or “stale” checks over sixty days old.
  • The signature should be legible and signed in the presence of the individual accepting the check.
    Do NOT accept previously signed checks. Make sure the check is filled out and signed in your presence. For a company check, it is vital that the signature is legible. If not, print the individual’s name on the front of the check. Compare the signature on the check to signatures on identification documents (ID) to ensure they are the same.
  • The complete address should be imprinted on the check.
    Do not accept a Post Office Box for an address. Obtain a physical street address.  Also obtain a phone number.
  • Accept checks only written with today’s date.
    Never agree to hold a check or take a post-dated check.  Post-dated checks are not accepted in the Check Deception Program and typically cannot be criminally prosecuted. This restricts any recourse you may have against the check writer if your own collection attempts fail. Do not accept partial payment on a bad check.
  • Make sure written amounts and numbers correspond.
    Banks will not honor checks with discrepancies between written amounts and numbers.
  • Avoid accepting checks drawn on an out-of-state bank.

REMEMBER, you are not required to accept a check from anyone. If you feel uncomfortable or suspicious, trust your intuition! Ask for another form of payment.