Tele Check

An American institution: a check guaranty-company. Started in Hawaii in the mid-Fifties. An entrepreneur sold the ability to query his database to determine if a check-writer had outstanding bad checks. Uses a MICR reader to read the barcode at the bottom of the check, which is connected to a modem, which calls home (Houston, TX).

Normally, a four-digit code is returned, denoting approval. Checks can be rejected as "Code Fours", outstanding bad checks, or "Code Threes", suspicious activities. Once a Telecheck merchant reports a bad check, Telecheck effectively "buys" the check from them, making it a first-party debt collector. (Third-party debt collectors are subject to more strict limitations under the Federal Fair Debt Collection Practices Act.) Telecheck prevents all Telecheck merchants from accepting your checks, until your bad checks have been paid.

Telecheck is forgiving; once your account has cleared, all Telecheck merchants will accept your check again.

Utilizes proprietary war-dialer software. Most low-level collectors are paid salary plus bonus for meeting goals, while higher-level collectors are on flat commissions plus bonuses. Offers, or offered, a discounted stock-purchase plan.

Two points:

Telecheck also works with Blockbuster Entertainment. It is entirely possible for a lost movie to cause your checks to stop being accepted at all Telecheck merchants, and for your returned check to prevent you from renting videos.
Telecheck is a win-win situation. Businesses that formerly could not take checks will. Those who prefer writing checks can. All store patrons pay a smaller charge to underwrite bad checks. The people who write bad checks are more likely to pay them, and less likely to be hassled at a local level. Paperhangers are more likely to be detected and caught.

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