Night of the Living "Dead" Check
When you are out talking to merchants about checks, and they ask you about Stop Payments placed on checks, how much do you really know about this subject?
Perhaps you will be able to tell your prospect the cost of Stop Payment coverage, that is if your Check Guarantee provider offers Stop Payment coverage, or maybe you will explain that consumers have a right to place a Stop Payment, if they have a dispute or are unhappy with the goods or services received. Either way a Stop Payment is a dead check right? Wrong!
You may be surprised to know that a "dead" check can come back to life. Stop payments are only good for six months. After that, they must be renewed or the check, which is a binding contract, can legally be cashed. So, if the checkwriter really wants to stop payment, it may mean costly and time consuming renewals.
Why can't
banks stop payment indefinitely? Why will they process checks that
are months, even years, old? The main reason is because people don't
cash checks, machines do. Those machines only read the MICR
information and verify that there is money in the account. (Yes, it
is true that some checks are manually reviewed by banks, large value
checks and some random sampling, but most checks just zip through the
system.)
The truth of the matter is, if a consumer really wants to stop payment on a check, his/her best bet is to close the account. Because this really is a hassle, even as much of a hassle as continually paying for and tracking stop payment renewals, most consumers don't do it.
What this means for the retailer is that they often have a second shot at the money by making dead checks live again.
