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Banks don't assess rejected check fees on checks purchased
through them -- even though those checks sometimes get rejected,
too. Just about anyone who has received a canceled check has noticed
that occasionally a check comes back with a piece of tape along
the bottom re-creating the coding that represents the routing, account
and check numbers. That check was rejected for some reason, then
repaired and processed.
That has some in the mail-order industry wondering
if the quality issue is a red herring.
Banks often get their checks from the biggest check
printers, such as Deluxe, Clarke American and Harland, and these
companies often sell checks through mail-order subsidiaries directly
to consumers.
"Deluxe is the parent of Checks Unlimited. Clarke
American is the parent company of Checks in the Mail and Clarke
prints checks for Bank of America," says Wade Delk, executive
director of Check Payment Systems Association, or CPSA, a trade
association.
"CPSA members follow the guidelines set by the
American National Standards Institute, and CPSA members represent
about 97 percent to 98 percent of all checks printed on the consumer
side. (Consumers) are being told one thing when it may not be accurate.
The quality issues are not there."
'Banks are losing profits'
John Browning, president and CEO of check printer Custom Direct
LLC, says it boils down to profit.
"Each time we see a financial institution taking
this type of action to prevent rejects -- charging the customer
for the cost of the reject -- the customer ends up paying the price
when there are as many rejects caused by checks printed by their
own suppliers, but they don't charge customers for those. Banks
don't want customers to buy from mail-order companies because they
lose profit on it. Banks aren't allowed to require customers to
buy from them because of anti-tying laws.
"We've challenged a large financial institution
on this -- on anti-tying and to prove that every one of those rejects
was caused by the document. A customer sent us some of their checks
that had been rejected, and those checks exceeded all the bank's
specifications. The key reason you're seeing this is because banks
are losing profits. If we didn't exist you'd be paying $50 for your
checks."
Meeting standards
Hall, of American Bankers Association, calls the profit
motive allegation ridiculous.
"Banks want people to buy checks that are of the appropriate standard to run through their machines correctly. If they buy them from their own bank then they're assured of the appropriate standard. But at the same time banks are happy to accept checks from other locations."
If you'd like to make sure that the mail-order checks
you're considering meet industry standards, check for the company's
name on the CPSA Web
site.
If you print your own checks, be sure to buy high quality paper and use magnetic toner to print the routing number, account number and check number.
"Some software vendors say you don't need magnetic
toner, just print it in the right font," says Ted Umhoefer,
senior vice president of product management at Fiserv. "But
that's a significant issue and the cause of rejects. The reader-sorters
read the font and get a pretty good read rate, but they also rely
on the magnetic characteristic of toner, and that significantly
increases the read rate."
Here are some tips from the American Bankers Association
to keep in mind when selecting check-printing software.
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Tips to keep in mind when selecting check-printing
software: |
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Are you familiar with the various notations on your
check? Do you know what information needs to be on your checks when
you order them or print your own? Take a look at "Anatomy
of a check."
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