What’s a good check policy?

Q. What is the recommended policy for accepting checks? Should I ask to see a driver’s license? What information should I record? What can be done if the check comes back for non-sufficient funds?

A. Establishing a check acceptance policy is important for avoiding bad checks, which cost businesses more than $800 million annually. Here are some tips from How to Prevent Bad-Check Losses, one in a series of Loss Prevention booklets published by the Michigan Retailers Association.

• Scrutinize the check to make sure it looks authentic and is filled out completely, correctly and legibly.

• Ask for photo identification, such as a driver license or state ID card. Look at the photo to make sure it’s the same person, and verify that the signature and address match those on the check.

• Record the following customer information on the check, if not already preprinted: name, address, home or work telephone number and driver license or state ID number. The person accepting the check must initial it, indicating that he or she witnessed the signing.

Recording these items strengthens your case in court if the check is returned as no-account or non-sufficient funds. The above information provides prima facie evidence of the check writer’s identity, according to a 1997 law passed with the support of the Michigan Retailers Association.

• Although you may ask to see a Social Security card or credit card as a form of identification, you must not write the customer’s Social Security number or credit card number on the check. Michigan law permits you to record only the credit card type and expiration date.

• If a check is returned from the bank, first contact the check writer and ask him or her to make good on the check.

• If that attempt fails, you may pursue civil or criminal prosecution.

• Civil prosecution allows you to recover the full amount of the check plus damages and costs. Claims of $3,000 or less can be filed in Small Claims Court.

• If you are not able to secure restitution, you may seek criminal prosecution against the bad-check writer. Penalties vary depending on the amount of the check written.

How to Prevent Bad-Check Losses gives more details on check acceptance and recovery procedures. To request a copy, contact MRA’s Retha Lachance at 800.366.3699 or rlachance@retailers.com. Single booklets are provided free to MRA members; additional copies can be purchased for $3 each. Non-members also may purchase booklets for $3 each.