Bad Checks

A check is not cash, but an IOU or promise that cash will be paid upon presentation of the check at the writer's bank. A check is bad when it cannot be redeemed for cash.

Businesses should establish a firm check-cashing policy and post it where customers can easily see it. This policy should include the following information:

Amount of check - limit the amount for which a check may be written or limit it to the amount of purchase; require management approval for any check written in excess of a set dollar amount.

Identification - The primary identification for collection purposes is a driver's license or special identification card issued by the state.

Local vs. out-of-state checks - Local check writers are easier to contact for collection. North Carolina courts cannot prosecute out-of-state check writers unless they can be contacted within North Carolina.

Other limits - Specify any other limits so they will be clearly understood by customers and employees.

Returned check fee - Collect a returned check processing fee of up to $20.00. All checks should accurately reflect the name, address (mailing & physical), driver's license or valid identification number, and home and work phone numbers of the check writer. If this information is not accurately recorded on the check, the employee should write it clearly on the check.

The following items should also be considered when accepting a check:

• be sure name, picture (or description), and signature match the check writer's identification;
• written and numerical amounts agree;
• correct date (not postdated);
• any erasures, alterations, or abnormalities;
• low check number (new accounts can be less reliable);
• local vs. out-of-state (use extra caution when accepting an out-of-state check. The writer should be a NC resident in case he needs to be contacted for collection).

Two-Party Checks - two-party checks have a higher incidence of unreliability and can be more difficult to collect.

Counterfeit Bills
The three basic types of counterfeit bills are:

1. Low denomination bills altered to appear higher (corners of large bills glued to small bills)
2. Photocopies of authentic bills, and
3. Printed counterfeit bills.

Inspect all bills, especially larger ones, for appropriate portraits. Compare them to known bills of the same denomination. Look for differences, not similarities. Counterfeits will be less detailed, have a flat appearance, and appear washed out.

Authentic bills are always printed on safety paper with fine red and blue hair-like fibers imbedded in them. Do not be fooled by colored lines printed on paper.

« this page last modified 04/27/04 »