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Check Verification -

What is check verification?
How is check verification different from check guarantee?
How does check verification work with BetterCheck?
What is factoring?  Why don't banks verify funds?

BetterCheck is a check verification system for businesses, and validates the actual bank account status as of the beginning of the business banking day. 

Not all check verification systems, and check verification companies are the same.  The term check verification can be very general and broad, or very specific.  Check verification should not be confused with check guarantee, which is a very different service.

Check verification is a system that uses the Routing Number, the Account Number, and optionally the Amount of the Check and the Check Number to determine if the checking account is real, if it is open and if there are positive funds in the account.

Check verification will determine based on the Routing Number if the check actually comes from the bank that is stated on front of the check or draft.  Check verification will provide the name, address and phone number for the bank the check is drawn upon, if the routing number is valid.  Check verification systems can be useful for ACH debit verification as well as check verification.

Check verification will also address the account number at that bank by checking the bank's information from that business banking day, as posted by the individual institution. 

Checking account number positive verification will determine, is the actual account and open and active account? Is there a positive balance listed on the account as of that day? Are there any holds or limits on the account?

Checking account number negative information is limited to the information supplied by the individual bank.  Negative responses for check verification could be as simple as, "invalid routing number," but could also be more specific account indication messages to help you determine exactly why your check may or may not be good.

Each verification message supplied by current check verification systems will indicate something about the account status to allow businesses to decide if they should process or not process the item.

Keep in mind that there is currently no system offered in the U.S. that allows a merchant or individual to verify and exact amount of funds. 

Why is there no company that can offer funds verification for exact dollar amounts during a check verification? One reason is that new bank privacy policies prevent the banks from disclosing this information to anyone except the account holder.

While it is not the law that dictates banks cannot provide account balance details on customers, more than 90% of banks have issued such privacy policies voluntarily.  One reason for this is literally to protect the privacy of the consumer. 

Banks that offered "merchant funds verification" by telephone until recently found that with automated systems, or live operators merchants, collectors and fraudsters alike could narrow down a balance using a technique called factoring.

Factoring is when you narrow down the account holder's balance by trying to verify using trial and error.  An example would be collection agency, or shopkeeper, or even a relative could sweep the account by doing a verification like this: Verify a check for$500 and find that it will not clear, then a $400 that won't clear either, then the next verification attempt for $300 says it will clear - that means there is at least $300 in the account.  Now try $375, that says it will clear too - then try $395 and the answer is no.  Someone doing factoring now knows there is about $375 in the account.  This is dangerous for unscrupulous users and eliminates the privacy of any individual who pays by check.  This practice of factoring is illegal in some states and banks have made it their business to not facilitate factoring by not providing check verification or account information.

Another reason that banks don't offer check verification any longer is that it saves them a lot of money.  Some banks and credit unions have spent 5% of their call-time and call center resources verifying checks for customers and non-customers.  This is a large expense that is eliminated as soon as the bank stops offering the service.  A bank with a call center of 20 can drop to 19 by eliminating this service.

Some banks have switched to still offering the service via a 900# or pay per call service only.  This type of system must be called from a land line phone and usually verifies one check at a time for $5 to $15 per call.  Factoring is near impossible as calls are traceable to a physical address and the cost of the call would prevent anyone from profiting on collecting. 

Banks also set up check verification capabilities for businesses and corporate clients who can also maintain the same level of confidentiality that is required in their own privacy policies.  Qualified businesses can get check verification systems like BetterCheck after agreeing to these privacy policies and proper use as defined in the Fair Credit Reporting Act.

BetterCheck is a system that offers the very best and most comprehensive check verification in the industry.  BetterCheck is designed to drastically reduce the number of bad checks you deposit or ACH returns you receive by providing live account information for most U.S. checking accounts.

Unlike check guarantee companies that base their decision on the customer's check writing history, BetterCheck uses the actual status and information about the account that day.


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