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5 Facts About Telecheck: Learn why merchants deny checks

Telecheck is a consumer reporting agency that helps merchants reduce fraud and identity theft-related losses using a consumer database.

Consumers writing checks are subject to TeleCheck ⏤ No matter what!

So what is TeleCheck?

Telecheck is a consumer reporting agency that helps merchants reduce fraud and identity theft-related losses. Telecheck does this by electronically verifying checks for merchants. TeleCheck builds and maintains a huge database of information aggregated from bank accounts, checks, merchant transactions, and debt records.

Now that's the short answer to “What is Telecheck” but here is the breakdown.

5 Facts About TeleCheck

1. Infrequent check writing can make you a risk

If you don’t write many checks, TeleCheck may consider you a risk. It's nothing personal and definitely not a reflection of sufficient funds in your account. However, TeleCheck may decide it does not have enough data to provide the merchant with an approval code. Similar to a denial of credit due to a lack of credit history.

2. Writing bad checks can land you in Telecheck

Part of TeleCheck Services is to flag consumers that have a history of writing bad checks. TeleCheck considers writing bad checks a serious infraction. That's because knowingly writing a bad check is considered fraud and is punishable by law.

3. Unpaid bank overdrafts are tracked by Telecheck

If you have a history of unpaid check debt like unpaid fees for bank overdrafts or other infractions, TeleCheck tracks and reports it for 5 to 7 years.

4. Telecheck runs multiple risk variables

TeleCheck uses multiple variables to determine the risk related to a merchant accepting your check. This includes related statistical data which may indicate that fraud is likely to occur. Everything from the type of goods you typically purchase to how much is spent, factors into TeleCheck's risk assessment.

What's so cold about Telecheck is that you can regularly write checks at your favorite shopping spot but on a particular day you try to purchase a high-dollar item, TeleCheck can choose to score that purchase as unusual or risky.

5. Identity fraud can cause a negative TeleCheck profile

Identity fraud can negatively affect your TeleCheck profile. For instance, if your personal information was stolen, then used in connection with cashing a bad check, TeleCheck may place that information in your file ⏤ without you even knowing it.

How Does TeleCheck Work?

TeleCheck uses a scanning system when you write a check to determine how risky it would be for the merchant to accept your check. Here is how it works:

  • You write a check at a retailer.
  • Your check is authorized through TeleCheck's system that captures banking information and the amount of the check.
  • The TeleCheck system works to determine the chances of the check being fraudulent or written on an account without sufficient funds based on information in their databases and your check-writing history.
  • If it is determined that your check provides minimal risk to the retailer, it is approved. When TeleCheck approves a check, they are guaranteeing the merchant will get the money.
  • You'll receive a receipt of the electronic transaction to sign.
  • When you sign the receipt, you will receive a copy for your records along with your check to keep.

What Does It Mean If My Check Is Declined By TeleCheck?

It could be no fault of your own if your check is declined by TeleCheck. Remember, the system does not have access to information about how much money you have in your account currently. A decline by Telecheck may simply mean they don’t have enough information in their database to say whether or not your check should be verified.

On the other hand, a TeleCheck decline could indicate an outstanding debt that’s been reported to TeleCheck. Thedebt could be owed to anyone who uses TeleCheck.

Ultimately, a retailer makes the decision about whether or not they’ll accept your check. Retailers have the option to override TeleCheck and choose to accept your check. If a retailer accepts your check despite a denial by Telecheck, they are accepting responsibility if the check bounces or is fraudulent as TeleCheck won’t guarantee a check that isn’t approved through their database.

What TeleCheck codes mean

When you get a denial from TeleCheck, you also receive a code explaining the reason for the denial. There are two codes most commonly provided:

TeleCheck Code 3
TeleCheck Code 3 means no specific negative information exists in your TeleCheck file, but your check was declined for other reasons. You might get a Code 3 if you rarely write checks, or if you happen to match a risk profile in the system.

According to Telecheck, “In general, the Code 3 is a risk decline that is generated per transaction and is based on, but not limited to, the consumer’s check writing history, check writing activity, dollar amount and the parameters that TeleCheck has in place with the specific merchant. Unfortunately, the initial generation of the Code 3 is not related to how much money a person has in his or her account.

There is no way to provide a general answer in response to a Code 3 because that will differ from check writer to check writer. If a check writer’s check is declined at a TeleCheck merchant , they can call Customer Service @800-366-2425 to speak with a representative regarding the check decline.”

TeleCheck Code 4
Specific negative information triggers a Code 4 from Telecheck. This code represents a rejection or decline from TeleCheck on a more serious level where the database recognizes several key pieces of information that prevent the warranty and security in order to let the check be processed.

Banks may use TeleCheck when opening new accounts

Financial institutions that want to minimize risk and reduce fraud typically use ChexSystems to screen customers. But some banks and credit unions use TeleCheck when deciding to open a new checking account. Certegy, Early Warning Systems, and CrossCheck are other popular databases that may be used by banks, credit unions, and merchants.

Major problems with Telecheck

While you can’t blame merchants for using a system to protect themselves from fraud and possible loss of profits, honest customers too often get denied check writing privileges for no good reason. Telecheck can incorrectly label good check writers as a risk.

  • The dreaded Telecheck Code 3 tells the merchant that the level of risk is significant. TeleCheck does not state whether the check is “good” or whether the check writer’s bank account has sufficient funds. It just flags the transaction.
  • Your check may be declined if Telecheck has little check-writing history on you in their databases.
  • How long you’ve been writing good checks at merchants, retailers or anywhere else is irrelevant.
  • Never having written a bad check is irrelevant to Telecheck.
  • Merchants that always accept your check but now use Telecheck may start denying your check.
  • Your check can be denied despite having sufficient funds in the bank.
  • Telecheck Code 3 is the one that most consumers get tripped-up on. But Telecheck does a poor job in explaining to consumers why they were denied check writing privileges for Telecheck Code 3.
  • When you call customer service to inquire why your check is declined be prepared NOT to get a reasonable answer; or, an answer at all.
  • Telecheck Code 3 decline can include anything from a consumer’s check-writing history, check writing activity, dollar amount to Telecheck’s internal limits for that particular merchant.
  • Telecheck representatives more than likely CANNOT tell you why your check was denied.
  • If your check is denied you can try your luck by calling Telecheck Customer Service at 800-366-2425.
  • Never seen or new account numbers can cause Telecheck to deny your check.
  • No previous history of shopping at a particular merchant can be a reason for denial because it doesn’t fit your normal shopping pattern.
  • Telecheck can be overridden by the merchant. A store manager can make the decision to accept your check despite a denial by Telecheck.
  • Telecheck is a specialty Consumer Reporting Agency that MUST follow the Fair Credit Reporting Act. This means you are entitled to a free annual report, but only through USPS regular mail.

How to dispute Telecheck errors

TeleCheck must investigate all disputes within a certain time period due to the Fair Credit Reporting Act. Telecheck is a consumer reporting agency which means federal laws mandate that consumer disputes much be investigated. You are able to dispute an item in the TeleCheck system just like you would dispute an item on your credit report.

TeleCheck has 30 days to respond to a dispute. If you requested a free report, that gives TeleCheck 45 days to respond.

Telecheck must verify the information with the bank or company that originally reported you. If you don’t receive an answer from TeleCheck from either 30 or 45 days from the date they received your dispute letter, they must delete the entry.

Verified items on your TeleCheck report can remain for up to seven years. If you decide to pay a debt reported by TeleCheck, they will remove the item.

Quick tips to dispute Telecheck

  • Errors or inaccurate information in your Telecheck Report can be disputed. Telecheck has 30-days to verify the information as accurate or delete it.
  • Complaints against Telecheck can be submitted with the Consumer Financial Protection Bureau at consumerfinance.gov and the Federal Trade Commission.
  • In 2015 Telecheck settled a class-action lawsuit regarding failure to properly investigate consumer disputes, so use the CFPB, BBB or your state's banking commission if Telecheck fails to properly investigate a dispute.

How to get a copy of your TeleCheck records

TeleCheck Services, Inc.
Attention: Resolutions Department-FA

P.O. Box 4514
Houston, TX 77210-4514

Call to get your Free Annual File Disclosure pursuant to the Fair Credit Reporting Act

Telecheck Customer Service

You’ll need to include information to help TeleCheck confirm your identity

(1) your daytime phone number
(2) a photocopy of your driver’s license
(3) your social security number
(4) a voided check (NOTE: Many experts warn against sending in a voided check and state that the rest of the documents should be sufficient)

Declined Check Information for Check Writers

Returned Check Collection

Fraud, Identity Theft, Forgery

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