In the United States, there are three main credit bureaus that collect and report your individual credit information. Much like the credit bureaus, TeleCheck is a consumer reporting agency that collects data related to checks and bank accounts.
TeleCheck provides your banking information to various retailers and financial institutions that use the data to determine if they will accept a check you write or approve you for a bank account. If you’ve made banking mistakes in the past, you may have some negative marks on your TeleCheck report. This can make it difficult for you to obtain checks or even be approved for a checking account.
What Is TeleCheck?
Out of the many consumer reporting agencies out there, TeleCheck specifically deals with checks and bank accounts. It’s commonplace for retailers to use TeleCheck to determine the risk of accepting a person’s check, making a decision instantly as to whether or not they will accept it as payment.
For example, if you’re checking out at the grocery store and decide to pay by check only to find out from the cashier that the check has been denied even though you have the money in your account to cover it, you’re likely dealing with TeleCheck’s system.
When a check is run through TeleCheck’s system, they use their data to determine how risky it is for the merchant to accept your check. These risk factors are determined based on TeleCheck’s risk measurement model.
The TeleCheck system determines the odds of a check being fraudulent or written on an account with insufficient funds. If the TeleCheck system determines that your check provides minimal risk to the retailer, then your check will be approved.
Additionally, some banks and other financial institutions use TeleCheck when deciding whether or not they should allow a consumer to open a checking account. Using TeleCheck’s services is done to reduce fraud and minimize the bank’s risk.
Most consumers have never heard of TeleCheck until their payment is denied or they are unable to get a bank account. This is completely understandable. If you’ve found yourself in a situation where you have been blacklisted by their system, there are ways to potentially solve that problem.
What Does It Mean When Your Check Is Declined by TeleCheck?
If the TeleCheck system declines your check, that doesn’t necessarily mean that you don’t have enough money in your account to cover the cost of your purchase. The system doesn’t have to access your current balance information.
A declined check could simply mean that the TeleCheck system doesn’t have enough information in its database to determine whether or not your check should be verified.
Aside from not having sufficient information, a denied check could also signal that you have an outstanding debt that’s been entered into the TeleCheck system. This debt could be owed to anyone who uses TeleCheck.
In the end, it will be up to the merchant on whether or not your check is accepted. TeleCheck is simply a tool used to help the merchant determine how risky it is to accept any given check. With that said, checks denied by the TeleCheck system can still be accepted but the check cannot be guaranteed and the owner will have to assume responsibility if the check bounces.
6 Reasons Why TeleCheck Declined Your Check
The process TeleCheck uses to figure out whether a check is to be accepted or denied by a retailer is difficult to know. However, certain determining factors can be outlined.
There are several components that influence your ability to have a check accepted or denied at the register. Here are six main factors considered by TeleCheck:
1. Insufficient History in Your File
If you haven’t written many checks in the past, TeleCheck may flag your inactivity as a risk factor. This is much like applying for a credit card but getting denied because of your limited credit history.
2. Too Many Risk Variables
There are many risk factors that TeleCheck will review when determining whether or not to accept your check. This includes relevant statistical data that can predict the likelihood of fraud occurring. This includes the type of goods being purchased as well as the amount of the purchase, as well as the type of retailer where the check is being used.
If you spend an unusual amount of money at a store you frequently shop at, you can still be flagged by TeleCheck if your purchase seems to be different than the purchases you’ve made in the past.
3. Unpaid Debts
If you’ve recently incurred unpaid fees like overdrafts and non-sufficient funds, these infractions can come back to haunt you. TeleCheck tracks check debt, and this history plays a critical role in whether or not a retailer will accept your check.
It is important to know that this type of banking activity history can last on your banking report for five to seven years.
4. Previous History with TeleCheck
Your TeleCheck profile can be flagged if you have a history of writing bad checks. Writing a bad check can include anything from floating a check or writing a check for which you have insufficient funds to cover.
5. Human Error
Even with technology rapidly evolving every day, human error is still prevalent in the financial world. A check that is denied can be on account of human error.
This can occur if a cashier submits your information incorrectly into TeleCheck’s point of sale device. Other accidental errors can occur from incorrect information listed on your ID.
6. Victim of Fraud
If you had to report an incident of fraud or identity theft to your bank or the police, this could be a situation that could cause your checks to be denied by TeleCheck’s system. Those whose personal information was compromised without their knowledge can trigger red flags through TeleCheck’s system.
What Are TeleCheck Codes?
When you have negative items on your TeleCheck report and attempt to pay a retailer with a check, you will most likely be denied if they use TeleCheck’s systems. When you are denied, you receive an explanation from them as to why you were denied.
When getting an explanation from TeleCheck, you will also receive a code to explain the reason for the denial. The two most common codes are code 3 and code 4.
TeleCheck Code 3
If you receive a Code 3 notification from TeleCheck, it means that they did not have any specific negative information on file for you, but you do have a lack of check-writing history. Those who haven’t written many checks can be flagged by Code 3.
TeleCheck Code 4
This is the code that will be issued if there is specific negative information on file in TeleCheck’s database. This code represents a rejection from TeleCheck on a more serious level where the database recognizes several key pieces of information that prevent the warranty and security from letting the check be processed. This error is indicative of a major alert for fraud potential from the check owner.
How to Dispute Items on Your TeleCheck Record
TeleCheck is a consumer reporting agency that is regulated by the Fair Credit Reporting Act (FCRA). You can dispute an item in the TeleCheck system the same way you would dispute a negative event on your credit report.
Those who have had their check declined by the TeleCheck system will be given a seven-digit record number. Using this number, you can contact TeleCheck directly for more details about why the transaction was declined.
If you think there might be an error in the TeleCheck database, you can order a copy of your TeleCheck report using the address below. TeleCheck is mandated by federal law to provide you with your free report every 12 months upon request.
It is important to carefully review your report and inquire about anything that seems out of place or is something that you don’t recognize. It’s always better to ask for clarification to figure out if it was an error that wasn’t accounted for.
How to Get In Contact With TeleCheck
To get a copy of your TeleCheck report, send a letter to:
TeleCheck Services, Inc.
Attention: Consumer Resolutions-FA
P.O. Box 4514
Houston, TX 77210-4514
You’ll need to include information to help TeleCheck confirm your identity:
- Your daytime phone number
- A photocopy of your driver’s license
- Your Social Security number
- One voided check (NOTE: Many experts warn against sending in a voided check and state that the rest of the documents should be sufficient)
How Does the Dispute Process Work?
Thanks to federally mandated laws like the FCRA, TeleCheck must investigate all disputes within a certain amount of time.
If you were denied the opportunity to use a check at a merchant and have the reason code, you could request a report for free. In that case, TeleCheck has 30 days to respond. If you requested a free report online, that gives TeleCheck 45 days to respond.
As part of the investigation process, TeleCheck will attempt to verify the information from the company that originally reported you. If you don’t receive an answer from TeleCheck within 30 or 45 days from the date they received your dispute letter, they must remove the entry.
This process is called verification. If an item can’t be verified within the mandated number of days, it must be removed from your report. But, just like negative credit items, any verified items on your TeleCheck report remain on the report for up to seven years. However, in many cases, it’s possible to have those items successfully removed early.
The Best Second Chance Banks by State
Most major banks fail to offer second chance checking accounts to those who have had a few banking mishaps in the past. However, many community banks and credit unions offer these accounts as a way to give everyone access to banking, no matter their past.
Our sister website, CheckingExpert.com, regularly updates the list of banks offering second chance checking accounts in every state. Here’s an overview of these accounts and where you can find them in your area.
Conclusion
Navigating how TeleCheck works is not always a straightforward process. In fact, most consumers aren’t even aware that this company exists. Having gone over the details of how TeleCheck operates, we hope you were able to gain some valuable insight that can make you a more informed consumer.
Always remember that even if you’re blacklisted by one of these consumer reporting agencies, you always have options. If you discover that you have some bad marks in the TeleCheck system, you have rights that allow you to dispute any negative or incorrect information. With a little hard work and persistence, you will be back on track in no time.
