If you're a merchant, landlord or similar businessperson, credit-reporting agencies, check-verification companies and other data brokers offer valuable services to help protect you against fraud.
But if you're an honest everyday person, and you're trying to rent an apartment, take out a loan or pay for something by check, chances are you take a dim view of such companies, especially since the only way you're likely to hear about them in the first place is if they flag you as a risk, which you only discover after your check is declined, loan application denied or some other unpleasant financial consequence befalls you.
Last month, for example, we told you about complaints we'd received from people whose holiday-shopping attempts became far more difficult after merchants subscribing to the check-verification service Telecheck declined their checks despite sufficient funds in their accounts.
Similar complaints come from people who had the same problem with Certegy.
“Certegy declined my Dept of Treasury refund check without giving a valid reason,” a California consumer said. And Lori from Pennsylvania said: “Today I visited a Michael's Craft store and wrote a check for $25.33 only to have it declined.”
“I went to HEB to cash a check for cash. I cash checks there often and today it was declined. I called the number on the card I was given, but I did not get through to anyone. Apparently, there were too many customers waiting," said Irma of San Antonio.”
Why does this happen? Certegy doesn't reveal the reasons behind its decisions but denies that it relies on a consumer's credit score.
"[Y]our credit score is not a factor in our risk models or any decision provided to merchants. Decisions are made based on information in Certegy's check writer database and a statistical analysis of your check compared to all checks that have gone through our system," the company says on its website.
What to do
What can you do to avoid this problem? Certegy did not respond to our request for comment on this story, so the only information we were able to glean comes from the company's Frequently Asked Questions (FAQ) page.
In short, Certegy says there is nothing that can be done to override the company's decision to decline to approve a check. But, on the other hand, the fact that one check is declined doesn't mean the next one will be.
Of course, the opposite is also true. Just because today's check is approved doesn't mean tomorrow's will be.
However, Certegy does offer a "VIP" program that may provide some help to creditworthy consumers:
In order to assist you in possibly avoiding a decline in the future, you can complete and submit to Certegy a Certegy VIP Enrollment Form. Membership in the Certegy VIP program is free. By completing the Certegy VIP Enrollment Form, we can assess any additional information not provided with your original check transaction. The additional information will elevate your check acceptance level in our system and help you to avoid most types of declines in the future.
If you would like more information on how you can become a member of the Certegy VIP program to assist in future purchases using your checking account, you can click here to download and print the Certegy VIP Enrollment Form.
How many consumers are enrolled in this program and how helpful it is to them are enrolled are, for the moment, unknown since we were unable to entice a human being at Certegy to speak to us.
Who's the customer?
Here's a problem — when we said “customers” complained about Certegy, that's not exactly the right word. You see, where check-verification companies like Certegy are concerned, you, the consumer, are notCertegy's customer; the store is.
There's a similar problem regarding credit-rating agencies like Experian and TransUnion — they rate would-be borrowers (whose financial lives are strongly affected by those ratings), though their actual customers are the would-be lenders.
This paradox has plagued Americans for over a generation now. Back in 1990, the syndicated humor columnist Dave Barry shared the story of a then-new offer he'd received in the mail:
This was an offer to sell me my own credit rating. Yes. One of the great benefits of living in America is that, regardless of your race or religion or hygiene habits, you are entitled to have a credit rating maintained by large corporations with powerful computers that know everything about you.... [if] I give them $20 a year, they'll let me see my information. The offer states: "Financial experts recommend that you carefully review your credit report twice a year to check its information and make certain that it is accurate."
In other words -- correct me if I am wrong here -- they're telling me that I should give them $20 a year so I can look at the information about me that they collected without my permission and have been selling for years to God alone knows who so I can see if it's incorrect.
Yeah, pretty much. Luckily, the legal landscape has shifted a bit since 1990; there are more laws intended to protect consumers. Among other things, you're legally entitled to at least one free copy of your credit report every year, rather than being forced to pay $20 as Barry was. (However, do not trust any company that offers you a “free” credit report, yet demands your credit card number first.)
Just for the record, the one and only place you can get your free annual credit report is https://www.annualcreditreport.com/index.action.
Certegy fined $3.5 million
It's not as though financial date and credit reporting firms are completely unregulated. Last August, the Federal Trade Commission levied a multimillion-dollar fine against Certegy the Fair Credit Reporting Act (FCRA).
Under the FCRA, consumers whose checks are denied based on information Certegy provides the merchant, have the right to dispute that information and have Certegy correct any inaccuracies.
The FTC’s complaint claims, among other things, that Certegy did not follow proper dispute procedures. The complaint further alleges that Certegy failed to follow reasonable procedures to assure maximum possible accuracy of the information it provided to its merchant clients, as required by the FCRA.