Chexsystems

The Chexsystems, the name strikes fear into the hearts of anyone who has had to deal with them (merchants excluded). Many of us at one time or another has bounced a check. For the majority of people who have had a check returned for insufficient funds, it is usually an oversight or miscalculation. So, in case you haven’t guessed the Chexsystems is a reporting system that tells merchants who has bounced a check.




What does this mean to you, a check writer? If you have ever bounced a check, and it got reported to the Chexsystems, there is a good chance that many merchants will not accept your check anymore. Take this situation for example: you wrote a check for $25.00 at the grocery store. Your husband made a $100.00 purchase with his debit card on the same account. He forgot to tell you. Payday is 4 days away. The $100.00 payment clears faster, because it was an electronic payment. On day 3 the check hits the bank for clearance and there is not enough money to cover it. So, your check bounces. The grocery store does not call you; instead they turn it over to an agency who immediately reports it to chexsystem. You pay the check and all fees. Nobody tells this to Chexsystems. You go to buy something at another store -- sorry, we can’t accept your check! Wow, this sounds awful. It happens all the time though. Unlike credit reporting agencies, Chexsystems does not require merchants to update their information periodically. You can have a very old report, come back to haunt you over and over again, even if it's been paid. So what do you do to avoid this?




In order to avoid problems with Chexsystems, you should avoid bouncing checks. Be diligent about balancing your checkbook and make sure you don’t “play the float” (the time it takes for a check to clear). However, if a mishap occurs, here are the steps you need to keep it all under control. Pay the merchant, and all the fees. Do this as quickly as you can. Get a receipt and hold onto it. Many merchants will give you a grace period before they report you. Tell the merchant that they need to report the item as paid in the Chexsystems. If the merchant does this, your information will be purged from the Chexsystems in about 5 to 10 days. After 10 days, contact Chexsystems and be sure that they do not have anything reported on you. If they have incorrect unpaid information, tell them that you have paid it. They will usually verify it with the merchant. If they cannot, get your receipt that shows the check being made good. Copy it and send to Chexsystems by either mail or fax. This should end your problem.




Having a system like this is not meant to punish honest individuals. It was designed to alert merchants and banks to those who are committing check fraud. There is a huge different between the person listed in our example above and someone who has 25 outstanding checks on closed accounts totaling thousands of dollars in 5 different states. Unfortunately, the processing systems at local stores do not make this determination. They see a record and it’s a no-accept policy. Learning ahead of the ins and outs of Chexsystems helps you to understand how important it is to never bounce checks. Now you will know what to do if you ever have a problem with the Chexsystems.