Check Verification & Check Guarantee Systems

What is a check verification system? Does it differ from a check guarantee agency?

When consumers pay by check, merchants often use an electronic system to determine if the shopper has a history of writing bad checks. There are two types of systems: check verification services and check guarantee agencies.

A check verification company provides an electronic database of people who have written bad checks or have had their bank accounts closed as a result of bad check writing.

The check guarantee agency takes this service one step further and guarantees that the check is good by reimbursing the retailer if the check bounces. Retailers and banks pay a higher fee for this service.

You may have experienced how a check guarantee or verification service works when you last purchased an item by check. A retail clerk usually runs the check through an electronic reader and enters the checking account number or your driver's license number into a terminal or calls a specific telephone number. The check guarantee or verification agency then approves or denies the check.

Why was my check rejected?

Your check may be declined for a variety of reasons:

  • You may have negative information on file (such as a returned check outstanding or a bank account closed by a bank).
  • Some agencies will look at how many times the individual has bounced checks (one time only versus a history of check bouncing);
  • others limit the number of checks they approve per day (if the limit is three checks in a 24 hour period, the fourth check will be turned down).

The databases of check guarantee/verification services are not perfect. You might find that you are listed as a bad check writer by mistake, even though you have a perfect record. An error in computer data input may have occurred. Or someone may be using your driver's license number or checking account number to pass bad checks. In either case, you have a right to have the error corrected. Names and telephone numbers of the major check verification/ guarantee companies are listed below.

What can I do if my check is declined?

The retailer will usually tell you the name of the check guarantee or verification service that rejected your check. You may call or write them to find out what information about you they have in their files, and, if necessary, to correct erroneous information.

  • Telecheck will state the reason for the denial by phone if you call within 30 days of the denial. If it is after the 30 days, they will mail you the information. Telecheck, Consumer Affairs, P.O. Box 17450, Denver, CO 80217. Phone number: (800) 927-0188.
  • National Processing Company (NPC) is another check guarantee and verification agency. When you call NPC, they will send you a letter explaining the reason for the rejection within three to five working days of your call. They may also be able to help you over the phone. National Processing Co., Consumer Assistance, P.O. Box 379, Riverdale, NJ 07457. Phone number: (800) 526-5380.
  • The credit bureau Equifax also provides check guarantee and verification services. If your check has been declined, you should write to Equifax's Consumer Affairs office. They will provide you with a written explanation for the decline of your check, or, if requested, an explanation will be given to you over the phone. Equifax Check Services, Consumer Affairs, P.O. Box 30032, Tampa, FL 33630-3032. Phone number: (800) 437-5120.
  • Chexsystems, a check verification firm, provides an electronic listing of closed checking accounts. Banks provide information to Chexsystems. You can call Chexsystems to see if you are in their database and if so, request to have the information mailed to you. They will not release the information over the telephone. Chexsystems, Consumer Relations, 12005 Ford Rd. Ste 600, Dallas, TX 75234. Phone number: (800) 428-9623.
  • Shared Check Authorization Network (SCAN), a check verification service, provides member retailers with access to a database of returned checks. The information contained in their database is provided by retailers. If your check has been declined by SCAN, they will let you know what negative information has been reported to them and by whom. Also, if you pay the outstanding unpaid check, your name will be deleted from their data base. SCAN Shared Check Authorization Network, Electronic Transaction Corp., 19803 North Creek Pkwy, Bothell, WA 98011. Phone number: (800) 262-7771.
  • CrossCheck, Inc. is a check guarantee and check verification service. CrossCheck, Inc., P.O. Box 6008, Petaluma, CA 94955. Phone number: (800) 552-1900.
  • CheckRite is a check verification service only. CheckRite, 7050 Union Park Center - #200, Midville, UT 84047. Phone number: (800) 766-2748.

For more information

For in-depth information on credit and banking, contact the organizations listed below. T hey have developed several informative brochures on these topics.

Federal Trade Commission, Public Reference, Washington D.C. 20580 (request the FTC's publications order form).

For assistance in re-establishing good credit, contact the Consumer Credit Counseling Service at: (800) 388-2227.