phonechex

Telephone Checks are Completely Legal

Phone checks offer a new opportunity that many businesses have been wishing and waiting for… the ability to accept personal and business checks over the phone, fax or on-line. Our new service allows millions of businesses to accept personal and businesses checks. Note: We cannot process money orders or checks from a savings account. These are not considered paper drafts and cannot be accepted over the phone, fax or internet. Will banks Pay Checks Over the Phone? Checks created by an entity other than the checking account holder are called “paper drafts.” With verbal consent of the checking account holder, the person or business that receives the verbal authorization can create a paper draft. They are processed the same as any other check and are returned to the checking account holder with their regular monthly bank statement (if they normally receive their canceled checks with their monthly statement).

Since the account holder does not have to sign the draft (only verbal agreement is required for authorization), it is necessary to get the required information about the check from the account holder over the telephone, fax or modem in the same way you can get credit card information over the telephone. The required signatory information is printed on each check by SWBD. Paper drafts are established as a legal method of payment as provided in the Uniform Commercial Code, Title 1, Section 1-201 [39] and Title 3, Sections 3-104, 3-401 and 3-402; Code of Federal Regulations, Title 12, Chapter II, Part 210; and Regulation J Federal Reserve Bank, Part 2, Section 4A-210 to 4A-212.

Banks refer to the type of checks prepared by SWBD as “Demand Drafts.” They are routinely paid by all major banks without any problem (when there is sufficient funds in the account to cover the check). Millions of checks are processed automatically every day. Most banks do not even check signatures for checks under $2500. Only rarely does an uninformed bank teller (usually from a very small bank) return a check for “signature not on file.”

If your clients (or prospective clients) don’t believe this, ask them to send in a test check. We will be pleased to create a check for them; or, if you are willing to return your commission, let your potential client test our service for 30 days. We have already seen that the percentage of checks taken over the phone and returned for insufficient funds is not any greater than checks routinely received by mail”.