Ben Todd | Apr 16, 2017 | 3
What is TeleCheck (and what to do about it)
TeleCheck is legally a credit scoring company, but to avoid confusion, they refer to themselves as a consumer reporting company. They keep records on how you handle your bank accounts, store accounts and checks. If you mishandle your accounts and/or perpetrate misconduct, then they file a blemish on your account. These blemishes will affect your chances of getting new accounts in the future with banks and stores. Blemishes on your TeleCheck report may also increase your chances of having your checks denied in stores.
The TeleCheck company has been in business for 50 years, which is twice as long as its competitor EWS, and almost as long as ChexSystems. A great many banks and financial services organizations (FSOs) use TeleCheck, as do quite a few stores in the USA. They protect banks, stores and FSOs by highlighting which potential customers are risks. It also gives these companies a reason to deny people’s checks and deny them the chance to open accounts.
It also protects the consumer too. If a person is having financial problems, such as some form of fraud is taking place, TeleCheck reports will start making it more difficult for the fraudsters to use your checks or your accounts. It will have a lasting effect on your ability to use checks and get new accounts, but it will lower your potential monetary losses.
Are They Watching Me Like The NSA?
They are not as intrusive as the NSA. You can send a text to your sister without TeleCheck reading it. The TeleCheck Company doesn’t actually dig into your accounts. Other companies report to them.
For example, if you overdraw in your current bank account, they will inform TeleCheck that you overdrew. When TeleCheck generates a report, the fact you overdrew will appear on your report as a blemish.
Does TeleCheck Monitor All Of My Transactions?
No, they do not. Their reports only feature blemishes that were reported to them. For example, your bank may not use TeleCheck in any way, so they have no reason to report to them. If a bank or store does use TeleCheck, then they will report any account mishandling to TeleCheck and it will appear on their reports.
There is also company policy to consider. After all, it is up to the reporting company to actually put the report through. There is a chance that you may misbehave with your account and the account issuer doesn’t report you. This sort of thing happens all the time, and it is usually due to company policy.
For example, one bank may have a company policy that says you may withdraw up to $100 without permission and they will not report you to TeleCheck. They may not report you because they feel it is fair, or they may not report you because it costs them money (in staff hours) to report you. Whatever their reasons are, there is a chance that some of your negative transactions will not be reported to TeleCheck.
What Is A Code 3?
If you use Google, you will have trouble finding out what all the other codes mean, but you will read plenty about code 3. If a bank or store sees that code, they are going to deny you the chance to open an account, and they will not accept your checks. It means you are a risk and shouldn’t be dealt with.
Why Has TeleCheck Had So Many Complaints?
All of the banking-history companies have had many complaints. EWS and ChexSystems receive hundreds every month, and have thousands of complaints logged on the Internet. The reason why TeleCheck seems to have more complaints online is because of their risk scoring function.
They give each profiled person a risk score, and a bank or store may deny you based on your risk score. The reason so many people are angry with TeleCheck is because their risk score is born from over 100 factors, but TeleCheck won’t tell people what they are.
If you get a report from TeleCheck, you will see the top three reasons why you were denied. However, if one of the reasons is that your risk score was too high, then that is all the explanation you will get. Some people feel that it is unfair that the company can give their risk score as a reason for denying them, and then not tell them why their risk score is so high.
Complaints About The Company Aiding Discrimination
There are some that feel the company helps banks discriminate against people that have less money. It costs a bank an average of $300 to set up a new account, so it is in their interest to deny accounts to people that are not going to pass much money through their accounts. A bank may be able to deny a potential customer and use TeleCheck an excuse.
The TeleCheck company doesn’t explicitly say you can use their reports in this manner, but they do hint at it with sales banter such as, “Utilize a risk scoring system to reject high-risk checks on the spot and minimize the expense and
hassle of attempting to collect on them later.” (TeleCheck Brochure).
The fact is that even banks do use TeleCheck as a way to discriminate against people; it is not TeleCheck’s fault. Many of their reported risk factors seem genuine and are based on legitimate data. TeleCheck may be the most unfair because of its risk reporting system, but a great many financial services organizations, banks and stores use it. If you manage your accounts well, and do your best to avoid fraud, then TeleCheck shouldn’t give you too many problems.
You Can File A Free Dispute With TeleCheck
Just as is the case with ChexSystems, if you are denied the opportunity to open an account or your check is denied because of TeleCheck, then you are legally entitled to a free TeleCheck report. You will have to keep proof of the transaction you were denied for and contact TeleCheck.
If your report has blemishes that are due to fraud, that are unfair or incorrect, then file a dispute with TeleCheck. It is free, and it is fairly easy. You do not need another company to do it for you.
Worst Case: Open a Second Chance Account or Find a Bank Not Using TeleCheck
You can try to dispute your record to fix the problem. Or wait years and years for the records from your Telecheck to be purged.
However, the best solution if you want a bank account NOW and not in years is to try applying online with a bank that does have a reputation for accepting customers with EWS or ChexSystems records.
We recommend trying to apply for the BBVA Compass ClearConnect Checking Account. They have a reputation for giving accounts to customers with bad banking history.
Need a Bank Account but have ChexSystems problems or Bad Credit?
Try opening a BBVA Compass Free Checking Account! BBVA is one of the more forgiving banks and may give you a full-fledged REGULAR bank account when you apply online...even with bad banking and credit history.
And if you don't qualify for the regular BBVA checking account for some reason, you'll then be given the option of opening the special BBVA Compass Easy Checking Account, an account designed specifically for those with banking problems.
...learn more about BBVA Second Chance Banking here
You can also see our list of Best Second Chance Accounts, which are accounts for people with EWS, Telecheck, or ChexSystems records.