Did you know that the district attorney's office in Santa Clara County, California is in the bad check business? About six years ago the office initiated their free, bad-check restitution program for merchants.
If you work in the Santa Clara area, you may have encountered this program as an objection to check guarantee services. If so, you can counter with the time and effort this program requires, as well as its low recovery rate.
The program's goal is to convince bad check writers to pay restitution, without police intervention or criminal prosecution. Here's how it works:
1. Merchant receives a bad check.
2. Merchant contacts check writer to retrieve funds.
3. If after 10 days the check writer has not paid the merchant, the merchant mails the check to the program
4. The program mails a letter on the DA's stationery demanding the money.
The program reports a 30-50% recovery rate. If the letter does not motivate bad check writers to pay, the matter is then referred for criminal action.
If you've encountered this objection or similar ones, it is important to let the merchant know that while this service is free, it is not a guarantee that funds will be paid and it will require extra time and effort. The merchant will have to draft letters to each bad check writer, monitor when 10 days has past, mail the check to the DA, and monitor if that motivates the check writer to pay. If the merchant doesn't view this as a lot of effort for a 30% to 50% chance that their bill will be paid, then maybe check guarantee is not for him. But, it's not likely.
