Mitigating financial risk is on everyone’s mind. Large corporations, big banks, and local merchants alike don’t want to worry about their finances.
Companies are out there to make money; losing any is less than ideal. So to ward off losses, many companies have sought out third parties to help them determine with who they should be doing business with.
TeleCheck services is one such company.
If you’ve ever had paper checks denied, you are most likely in the TeleCheck national database.
Read on to figure out what TeleCheck is, and learn how to prevent check denial in the future.
What Is TeleCheck?
TeleCheck was born out of a desire to help companies mitigate risk when working with customers.
No merchant wants to receive a bad check, and even fewer want to go through with the lengthy process of receiving the funds owed.
That’s where TeleCheck comes in.
TeleCheck provides risk analytics services and check processing that tracks a consumer’s check-writing history to determine the risk a merchant will have to assume by accepting a check from that individual at the point of sale. For instance, if you write a check at the grocery store, they may use TeleCheck to valid the check’s worthiness.
Many people are familiar with other forms of financial worthiness, such as the three main credit bureaus, but they are not the only ones to exist in this space.
TeleCheck is known as a CRA or a Consumer Reporting Agency. There are many companies in this niche, and TeleCheck specializes in physical check acceptance.
TeleCheck exists to help merchants understand who they should accept checks from. So if you ever a declined check or not accepted, it may be because of TeleCheck.
How Does TeleCheck Work?
TeleCheck is not a complex operation on the surface.
When conducting check transactions, they will run the information on the physical check through TeleCheck’s database.
TeleCheck’s system will then tell the retailer whether or not they should accept the check. TeleCheck does not decline the check themselves. Instead, they offer a recommendation to the retailer based on the information they have in their system.
TeleCheck will either recommend that a retailer accepts the check, or they will suggest declining it.
TeleCheck uses its database to determine your financial risk. Its database includes information submitted by other merchants as well as information garnered through the Predictive Scoring Risk Model.
The Predictive Scoring Risk Model is used in conjunction with your specific history because there may be limited information in your file for TeleCheck to make an informed decision.
This risk scoring model is an algorithm that uses existing consumer data to predict the risk of users who do not have sufficient data on hand.
Unfortunately for the consumer, this algorithm is why a check may be declined even when sufficient funds are in their checking account. Also, if you rarely use checks, then the algorithm may find your purchase suspicious and decline to recommend you.
Again, TeleCheck does not decline checks themselves. They merely review the information they have on you in their database and make a recommendation to the merchant.
The merchant decides to accept or decline your check.
That being said, merchants are incentivized to listen to TeleCheck’s recommendations.
If a merchant using TeleCheck ignores its recommendation to decline a check, and the check is bad, it is on the merchant to retrieve the funds themselves.
But if TeleCheck makes a mistake and recommends a check that turns out to be bad, TeleCheck provides the retailer a warranty and will pay the money that is owed.
What Does It Mean If TeleCheck Declined My Check?
There are a number of reasons why TeleCheck may decline a check. However, just because they’ve declined your check does not mean your check is bad or that you don’t have money in your account.
If TeleCheck declines your check, it may just mean that they do not have enough account information about you, and their algorithm produced a false negative.
It could also mean you have an outstanding debt that TeleCheck knows about that is in their system.
The exact system TeleCheck uses to determine eligibility is unknown, but some indicators will impact your check worthiness in their eyes.
Several indicators include:
- Insufficient Information
- Risk Factors
- Fraud
- Unpaid Debts
- TeleCheck History
- Human Error
Insufficient Information
If you don’t open the checkbook frequently, TeleCheck may flag that inactivity as a risk. Or they might think it’s fraud. The lack of use means TeleCheck doesn’t have enough information that makes them feel comfortable placing a warranty on your check, so they might decline to recommend it. Examples of this include a new checking account that has little to no history.
This is akin to applying for a credit card without having sufficient information or long enough credit history, although it is not your fault that writing a check isn’t your go-to payment method.
Level of Risk
TeleCheck uses several variables to determine risk when recommending your check, including statistical data that could indicate fraud may occur.
The statistical data could include the purchase amount, what exactly is being purchased, or the type of retailer from which the goods are being purchased. If you buy an unusual item or make a purchase larger than normal, TeleCheck may flag that as risky.
Fraud
If you have been a victim of fraud such as identity theft about your bank account to the bank or police, TeleCheck may decide to decline your check. Yes, they can do this even if you report the fraud yourself. Information is typically transferred to the consumer reporting agency, and any checks from that checkbook number will be declined.
Fraud that you aren’t aware of is also linked to your TeleCheck account number. Any negative hit related to your financial account attached to your name can be in the TeleCheck system, even if you didn’t do it yourself.
Unpaid Debt
If you have negative information such as unpaid fees, overdrafts, bounced checks, or outstanding debts, TeleCheck will know about it. TeleCheck knows your check debt history and will make an informed decision based on it. Even debts that have been cleared will remain in the TeleCheck system for 5 to 7 years, meaning you may have to deal with having checks declined for that length of time.
TeleCheck History
If you have a past history of writing bad checks, then your TeleCheck profile will be flagged. TeleCheck views this as a serious infraction as it directly relates to your financial history. Consumers fall into this category if they have written checks with insufficient funds in their account or those who have attempted to “float” a check by waiting a few days for their bank to receive their next paycheck.
Human Error
Even though this is primarily a tech-based transaction between TeleCheck and the retailer, inaccurate information by human error can still occur. For example, your driver’s license information could have been miswritten by the sales clerk, leading to inaccuracies down the line, or your cashier might have mistyped your check information. While unfortunate, human errors still remain a reality for many.
Remember, TeleCheck also uses the Predictive Scoring Risk Model, which uses an untold number of factors to predict your check worthiness.
How To Dispute TeleCheck
TeleCheck’s word is not law, and consumers are able to dispute items on their TeleCheck account history if they believe certain information to be false or made in error.
TeleCheck keeps and sells personal information, which means they are a consumer reporting agency. They are regulated by the Fair Credit Reporting Act (FCRA). A person would dispute an item on the TeleCheck history just as they would dispute a negative item on their credit history.
If your check is declined because of TeleCheck’s prediction, your cashier should give you a seven-digit record number. This number will be used when contacting TeleCheck in reference to the incident.
As the FCRA regulates TeleCheck, they are required to provide one free report every 12 months. If your check is declined based on information in your profile, then they are also required to give you a free report.
To obtain a report, you must go to the TeleCheck website and use the TeleCheck Consumer File Report feature.
You will have to provide the following contact information:
- First and Last Name
- Address
- Phone Number
- Social Security Number (SSN)
- Driver License or State ID Number
They may also ask for checking account details, but this is not mandatory and should not be completed as they can verify your identity by Social Security Number.
Once you obtain your report, you can scan the information provided to ensure it is accurate. If there are any mistakes, you can open a dispute.
TeleCheck has 30 days after opening a dispute to complete its investigation and verify the information. However, if you request a report under FCRA rules, the investigation window is 45 days.
To avoid unnecessary delays, submit additional information such as justification and comments explaining your stance.
TeleCheck will either verify or not verify your information.
TeleCheck Verifies Information
If TeleCheck verifies the information with the company that reported you, you can ask for a verification method. TeleCheck has 15 days after receiving your request to tell you exactly how they verified your information. After receiving this information, you can open a dispute with the business you tried purchasing from directly.
TeleCheck Does Not Verify Information
If TeleCheck doesn’t verify your information, it will remove the negative hit from your report.
If an item isn’t verified within the mandated number of days, then it must be removed from your TeleCheck report. However, if it is verified, the negative item will remain on your TeleCheck report for up to seven years.
Wrapping It Up
TeleCheck exists to save merchants the hassle that occurs from accepting bad checks.
They use a predictive risk algorithm, among other factors, to determine a consumer’s risk, and unfortunately, this can lead to false negatives.
If your check is declined despite having sufficient funds, the best way to address this is to request a TeleCheck report. You may just be able to clear your name and prevent this from happening again.
