The Electronic Check Council is currently promoting ECP piloting (Point-of-Sale Check Truncation) with a business model described as the "Consumer as Keeper" model. This simply means that the consumer will get the check back at the point-of-sale, so that the merchant can't double dip the consumers account, or get paid more than once for an item.
As a contrast to this approach, some ECP pilot programs have used the "Merchant as Keeper" model which, of course, means that the merchant retains the check, and the item is collected through the ACH process. While it is thought that the "Consumer as Keeper" model is a safer direction, the amount of work skip tracing the consumer, and the cost of uncollected items, are expected to be greater in this model. One would therefore have to say that the two approaches weigh the risk of double dipping against the cost of what may be a riskier collection scenario, and in this case, comes out on the side of higher costs. The question is "Why?"
The answer is something called "The Aunt Tilley Effect." This is the big fear on the part of everyone conducting Point-of-Sale Check Truncation: Some sweet elderly woman (Aunt Tilley) will have her truncated check double dipped, and she will find a newspaper or TV station that will love a good David and Goliath story. Can you imagine the difficulty of explaining the events? Also, we must realize that Aunt Tilley's bank will say that the paper check transaction was the correct event, that it was the ACH event that was in error. Never mind that the ACH event was first and authorized for ACH, paper checks are safe and the rest is simply a lack of good control. Think about it: the concept behind a big public company grabbing money from Aunt Tilley's account, without authorization, makes the officers and directors of public companies weak in the knees.
Well, we were recently apprised that a merchant who was using BankServ as their ECP provider, and the consumer as keeper model, did indeed submit captured ECP items to a check guarantee company (CrossCheck), who in turn submitted the items for redeposit. (The above check is one of several such checks.) Since all the checks in this case, which were written by several different checkwriters, are stamped "VOID ACH processed," one would think that CrossCheck (or at least their bank) would have noticed that these checks were void. The reality is, of course, that no one looks at all checks, only the larger ones. Banks machine-process items, and so does CrossCheck, and this type of item will easily go through the system.
While the merchant is adamant that this was an error that they can not explain, it clearly indicates that the "who is keeper" concern is valid and the lack of a working solution is a 20/20 story waiting to happen.
