Have you ever come across a situation where your check has been denied? If Yes, then you must have heard the word ‘TeleCheck’ but if you never had your check denied then maybe it is a new word for you. TeleCheck is a check acceptance company that is held responsible for collecting and maintaining consumer-related information in the area of check transactions and bank accounts. It is most widely used by those banks and financial institutions which don’t depend upon ChexSystems for pre-screening of new checking accounts.
Approximately 374,000 merchant locations rely upon TeleCheck and their information on check’s earlier transactions while accepting the check transaction. If you have a history of bad checks, insufficient funds, or suspicious transactions then there are high chances that TeleCheck holds every information about that. This may lead to declining checks on some of the stores like Walmart, Walgreens, or Kmart.
Many of us aren’t aware of this company and its impact on our daily life but being completely ignorant about this concept doesn’t make it less risky. This article will help you in clearing the air in every way possible regarding TeleCheck, how it works, the verification process, the reason for declined checks, TeleCheck codes, its significance, and much more.
What Is TeleCheck & Its Significance?
TeleCheck is a consumer reporting agency (CRA), for several merchants that look up to them for authentic yet reliable information. TeleCheck records the data of multiple checks of their clients which becomes a go-to spot for them to check whether a particular check offered by a customer should be accepted or not, this helps them in maintaining their risk levels. If a check is approved by TeleCheck, the merchant gets an assurance regarding his payment.
TeleCheck does not signify that a check is good or bad, it only means that either TeleCheck doesn’t have enough information regarding the same or has an unpaid check earlier. It doesn’t have your bank account details but merely some historical files stating the check transactions you made in the past. The approval is made to the merchant in accordance with that only.
How Does TeleCheck Work?
Let’s suppose you went to an outlet where a merchant uses TeleCheck. You spend 2 hours collecting all the things you need and after standing in a checkout line for almost 20 minutes, you reach the cashier and write a check. The moment you feel that the hard part is done now, the cashier says your check is denied. It may blow your mind for a few minutes to realize that you have sufficient money in your account so what happened? Well, TeleCheck happened.
When you have presented a check to a merchant, he might have added your information in the TeleCheck scanning system. TeleCheck assures the merchant whether a check is worth accepting or not. After running through the database including your check-writing history, it sends the approval to the merchant. If the system doesn’t have enough information or bad check transactions history, it will be disapproved.
TeleCheck Verification Process
According to some sources, TeleCheck uses two credentials while analyzing and examining the check. It is your debt history and the check history. It does a thorough check on your past transactions and debt history tracked by Equifax, Experian, and TransUnion.
Reason for Declined Checks?
There could be many possible reasons for your check being denied by TeleCheck, though it cannot be the exact ones because TeleCheck has always kept it anonymous. However, there are some factors that have a great impact on your check and debt history which are listed below:
- Controller Error
Though technology is booming day by day and is marking its territory in any and every field, the matter, of course, is that it is still managed by a human so there are high chances that your check is declined by a common human mistake.
- Insufficient History
Having sufficient history is much needed to avail some benefits in this era. Whether it is about opening a bank account, acquiring a credit card, or writing a check. TeleCheck often disapproves a check if it doesn’t own much history to provide risk security to a merchant.
To add more, if it doesn’t have a sufficient set of transactions to prove its reliability then it is not meant to be approved. It does not define whether a check is good or bad.
- Risk Factor
To cover the risk factor of the merchant, TeleCheck considers numerous parameters to analyze whether a check is worth accepting or not. These are based on the earlier transactions made from that checking account.
To ensure security, TeleCheck reviews the transactions that are made usually, for instance, what product is bought, how much money is spent, in which stores, etc. They also consider statistics and if anything seems odd or a new transaction, the check is disapproved.
- Severe Debt History
Some mistakes are never off the rack even if you have done your part to correct them. Unpaid debt, late payments, or overdraft fees create a big red spot in our history and even if you have cleared your dues, there is still a huge possibility that it will affect your check transactions.
- Past Transactions
To analyze and examine your banking behavior, your past history plays a vital role to do the same. Writing bad checks can also be the reason nowadays for your declined checks. Bad checks can be in reference to writing your checks with an insufficient amount in the account or floating a check for a few days until your next paycheck is received.
Also, check out 6 Banks That Don’t Use ChexSystems
To justify the reason for the denied check, you are provided with a code to check the cause for the same. There are two types of codes that are primarily provided :
TeleCheck Code 3
After writing a check to perform a transaction, if your check is denied as per TeleCheck code 3 then it states that your check is denied on the grounds of not owning much information to analyze the authenticity of the same and not on the basis of some negative information.
TeleCheck Code 4
On the contrary, TeleCheck code 4 represents the source of negative information found in your transaction history. It can be overdraft fees, risk factors, unpaid debt, late payments, bad checks, and much more. This is a signal of the high threat that a check can cause with its fraudulent transactions.
What to do if TeleCheck Report has an Error in it?
Checking a TeleCheck report and making it rectified in case of wrong or inauthentic information is always recommended rather than doing nothing about it and letting it go. When a check is denied, you are provided with a seven-digit record number by using which, you can surely ask for more details from TeleCheck.
If there is something off about that information, ask for a free copy of your record which you can acquire from TeleCheck every 12 months, and examine it carefully. Contact TeleCheck if something is not correct and ask them to update it (on the contrary, it is not possible in ChexSystems to update the report before 5 years).
TeleCheck is regulated by the Fair Credit Reporting Act (FCRA), which means you can always file a dispute in case of misrepresentation of the information.
What Precautions a Consumer can take to protect himself from Check Fraud?
To safeguard himself from being the victim of check fraud, a consumer must take the following precautions :
- Keep a thorough check on your TeleCheck report. You can acquire a free version of that every 12 months.
- Shield your checkbook in the same way you do your cash and credit cards to protect it from being misused.
- Never allow a third party to negotiate your check.
- In case of suspicion regarding your check being misused or someone is pretending to be you, alert your bank and check acceptance companies immediately.
- Grant power-of-attorney to your bank to have a word in reference to theft with companies like TeleCheck.
- If your check is ripped off, inform the police authorities as soon as possible.
TeleCheck is a surprise for many but a well-handled experience for some. If you ever had a denied check then you must be aware of the same. It is a two-way system that can either take you high if used carefully or can also pull you down in case of negligence.
In case of any confusion, drop down your question in the comment box below. We will be happy to help.