Electronic Check Processing
Many companies are now using electronic check processing which means the actual check a customer writes doesn’t mean much, short of authorization to take money from their back account. Many retailers are now scanning the checks and giving the actual paper check right back to the customer as they don’t need it for any reason.
Electronic check processing works like this: you write out a check to a business and hand it to the cashier. The check is passed through a computer where your bank information and check amount are electronically recorded. You may be asked to sign a receipt, like you would if you had used a credit card and you may get the check back from the cashier. They may mark it or void it in some way in order to stop you from using the same check again. The funds will be immediately transferred in most situations and gone are the days of post dating and having a bit of time in order to cover the amount of a check.
By law, consumers must be informed if the retail establishment in question uses electronic check processing, but the means in which the business can inform consumers may be a bit sneaky. The law only says they must inform consumers, but not how they have to inform consumers. As a consumer it may be difficult to determine if this is a practice at a local store. Some stores have a sign by the door, or others may have a sticker on the cash register for instance. They are within the law as long as they have some notice, no matter how conspicuous the notice may be.
Some things you can do to ensure that you don’t get any bounced checks or overdraft fees from check processing include keeping track of your deposits and balancing your checkbook daily. If your financial institution offers electronic banking, you should make sure that your balance is matched with your checkbook. Your bank may also offer some kind of e-mail or text message notification if or when your balance is under a pre-determined amount, so you will be aware not to go over that. On a monthly basis you should make sure your statement has all checks you have written throughout the month accounted for and they are only counted once.
It is especially important to be cautious with telephone and online transactions. They will take payment immediately as well. Companies that take telephone and online check processing are also required to inform consumers that they are immediately taking the money from your account, but again, these notifications may be hidden in fine print or mailed notices you may have thrown away.
Since check processing can be a very quick transaction, scammers have caught on quickly. Never give your checking account information to anyone unless you know they are a legit company or organization. If you feel you have been scammed or false charges have been put on your account, contact your bank to stop payment and contact the Federal Trade Commission to inform them of fraudulent practices.
