National City Check Using Credit Information to Authorize Checks
National City Processing Company, Check Services Division, formerly JBS Associates, is apparently not only using its own negative data to decline consumer checks which are being called in for "Guarantee", but also credit reporting information, according to the language in their consumer decline letter series. In a December 9, 1995 letter National City states, "Our business is advising the merchant as to whether NPC will approve or decline checks based upon a probability that the check will be honored. One of the ways in which we make the determination is by utilizing various resources including a credit reporting agency." In the case of the particular consumer decline letter we received, the credit reference was to Trans Union, and the letter stated that NPC was unable to obtain such a report from the credit bureau, and therefore declined the consumers check. Consumers as well as merchants clearly understand when a check is declined, based on previous bad check history. However, it seems less likely that either a consumer or the merchant will necessarily be able to understand how their credit history has anything to do with check acceptance. When merchants purchase "Check Verification", they accept that they are purchasing what is called "Consumer Reporting Information". Generally, that which differentiates purchasing "Check Guarantee", from purchasing "Check Verification" is that the Guarantor is looking for reasons to approve rather than decline checks. Since both Credit Reporting Agencies, as well as Check Verification companies sell negative information, it is understandable that they would want to provide as large a negative base as possible, and from whatever source is economically viable. The business of "Check Guarantee" providers historically, however, has been risk management, not risk avoidance, and in this regard NPC is clearly breaking new ground using credit information, or the absence of credit information, to decline checks.
Grocery: Check Fraud Experience
- Average Worthless Check: $67.13
- Average Annual Net Loss per Store: $11,786.96
- Net Loss Per Company, as a percent of Gross Sales: 0.08%
- Average Percentage of Returned Check to Total Accepted: 5.0%
- Average Yearly Bank Charge for returned checks: $149,397.97
- Average Yearly Total Collected from Customers in Bounced-Check Fees, which may not be able to be charged in the future: $798,461.69
- Average Charge Per Customers For Returned Checks: $18.30
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