Check-cashing businesses use personal information to seek action against people who pass bad checks.
For customers to utilize services at a check-cashing business, they submit an application. Personal information submitted during this application process creates a way for the business to find customers if they pass a bad check, which is a felony. Business owners are finding ways to minimize the hassle of dealing with bad checks.
Check Cashing
People who frequent check-cashing facilities typically have reasons they cannot deal with banks. They may have credit issues and are in the Paychex database because of problems with a previous account. People who cannot provide proper documentation to open a bank account also utilize check-cashing facilities. Check-cashing facilities cash your check and take a percentage of your money for providing the service.
Application
You must apply to have check-cashing privileges. The application requires a mailing address. You state your work address. Check-cashing businesses want to know everything about you, considering the transient nature of their clientele. If your application is approved, you are issued an identification card for use every time you cash a check. Some check-cashing facilities charge you an annual fee, reinforcing a membership environment.
Fees
Check-cashing facilities charge customers substantial service fees. Unlike a bank account, where you a charged a monthly maintenance fee, check-cashing businesses collect a percentage of each check you cash. Sample fees may be 1 to 5 percent of the total value of your check. The check-cashing business knows its customers have no choice but to pay a steep price for its services.
Consequences
Bad checks are bad for business. The check-cashing facility is hit with a returned check charge. This charge is in addition to the amount paid to the customer to cash the check. The business first contacts the customer via phone to let him know his check was returned. Certified mail is then sent encouraging restitution. Finally, the business can pursue legal action and have a warrant issued. The individual who cashed the check can be arrested.
Penalties
The time given to you to make good on your check varies by state. The check-cashing facility resorts to legal action a week or two after sending you notification of your bad check and not receiving a response. You are arrested and taken before a judge. If it is determined you unintentionally cashed a bad check, you will pay the check amount plus additional penalties. If you are a repeat offender, you will be sentenced to jail time and fined.
Solutions
To reduce the time wasted by businesses chasing people who cash bad checks, proprietors have created a database. A grocery store owner created the computerized database after growing tired of losing money. Information in the database comes from the application and photograph taken when an applicant applies for check-cashing privileges. With business owners taking preventive measures, they can provide better services without raising fees.
