Bad Checks

Bad checks and check fraud cost Essex businesses thousands of dollars a year. These losses are passed onto the customers who pay through legitimate means. Checks are a necessity in modern business. Although bad checks cannot be entirely eliminated, the risks inherent in accepting a check can be reduced through proper practices.

Bad check losses can be limited by setting up a check policy and then making sure that employees follow it. The word quickly gets around in the criminal world about which stores and businesses are easy marks, and which ones will take checks from anyone. Every business owner must ensure that their policy discourages these undesirable checks while not driving away responsible customers.

Crime Elements

Issuing a bad check is a criminal offense in Vermont if all the elements of the crime are met. The hardest thing to establish in most of the cases is identification. The litmus test for any case is whether the person who accepted the check as payment can get on the witness stand and identify the person who passed the check. It is not enough to simply write down the license number on the check as that does not positively identify the person passing the check. It only indicates whose license was provided as identification.

A successful criminal prosecution can be accomplished by using a number of pieces of information to establish the identity of the person issuing the check. When these are all put together in an affidavit, they may be sufficient to establish the identity of the person who passed the check so that prosecution is possible.

Examples of other useful information include: 

• The physical description of the person passing the check
• A description of their vehicle, and if possible a registration number
• A description of any persons with them
• Whether their ID was of the photo type
• Anything else about them which would assist in their identification

Business Owner Rights

Business owners must remember that they have no obligation to accept a check for a purchase as long as their policy does not illegally discriminate. If you feel uncomfortable about accepting a check, you have the right to ask for further information or identification until you can establish enough information to justify accepting the check. If this is unsuccessful, the business owner must ask whether the sale is worth the risk of allowing this merchandise to go out the door knowing they may never be paid for it.

Ideally, one should only accept checks from customers personally known to the merchant and in good standing. In today's world, this is often not possible. The following suggestions will help to limit the number of bad checks received.

• Make sure the information offered is current and matches the physical description of the customer. Match the signature on the check against that on the identification. Be sure the customer signs the check in your presence.
• Do not accept checks drawn on an out of state bank even if imprinted with a local address for the account holder.
• Customers from outside the greater Burlington area are important to local merchants. The vast majority of them are responsible customers. However, some are not and come to the area to pass a large number of bad checks. A merchant must consider why someone would drive 50 to 100 miles to buy an item that is commonly available in their home town. Sometimes, the reason is that they have worn out their welcome with the merchants in their home area and no one will accept their checks due to past abuses.
• Do not take two party checks.
• Ask the customer their actual address if all that is imprinted on the check is a box number or other non-specific address. Ask the customer if the address on the check is their current address and ask for their phone number. Write these on the check along with the initials of the employee accepting the check.
• Do not accept post dated or pre-dated checks.
• Be cautious of persons who buy an item with a check and then return later to purchase more items. In some cases the first purchase was a chance to test out your check policies. Once they determine you will accept a check without question, they come back to purchase items of higher value.
• Often a merchant will take a check which afterwards they feel may not be honored by the bank or which may even be a forgery. Due to the fact that the check is not returned from the bank for several days, it is important to record information of the transaction immediately after the sale which will assist if later prosecution is necessary. By the time a check is returned from the bank, the descriptive information needed is no longer fresh in the mind of the merchant or clerk accepting the check.
• While the police are not a collection agency, a successful prosecution for issuing a bad check may result in restitution. This will also help encourage the subject and others to avoid passing bad checks in the future.