How Does PLS Verify Checks? A Step-by-Step Look
Learn how PLS meticulously verifies checks, detailing their internal scrutiny, advanced tech, and risk assessment to prevent fraud and ensure validity.
Check cashing services, such as PLS, offer immediate access to funds for individuals without a traditional bank account. To manage risks like fraud and insufficient funds, these services employ rigorous check verification processes. This careful examination ensures the legitimacy of each transaction.
Initial Check Examination
When a check is presented, the initial step involves a thorough visual examination. Employees scrutinize key elements: the check’s date (to identify stale-dated checks), the payee name (to match identification), and both numerical and written amounts (for consistency). The drawer’s signature is also visually inspected for any signs of forgery or unusual characteristics.
The routing and account numbers, located at the bottom, are crucial for identifying the issuing bank and specific account. These numbers are essential for electronic processing. Assessment also includes checking for physical alterations, proper formatting, and security features like watermarks, which help confirm authenticity. This initial review helps identify red flags before deeper verification.
PLS’s Verification Steps
Beyond visual assessment, PLS and similar services use internal databases to verify legitimacy. These databases contain records of known fraudulent checks or problematic customers, flagging individuals with a history of bounced checks or suspicious activity.
In addition to their own records, check cashers widely utilize third-party check verification services, such as TeleCheck or Certegy. These third-party systems access extensive databases that track check-writing history from thousands of retailers and financial institutions across the country. When a check’s routing and account numbers are entered, these services analyze the data, assessing the statistical risk of the check bouncing due to insufficient funds or being fraudulent. They provide an instant recommendation to either approve or decline the transaction.
Some check cashers may contact the issuing bank directly to confirm account status and fund availability. These systems also help identify common red flags, such as unusually large check amounts, recent account openings, or multiple checks from the same issuer, which may indicate higher risk.
Potential Outcomes of Check Verification
Once the verification process is complete, there are several potential outcomes for the customer presenting a check. If the check is approved, the service will disburse the funds, typically after deducting a fee. These fees vary widely, often ranging from 1% to 12% of the check’s value, with a nationwide average around 4.1%. For example, cashing a $1,000 check might incur a fee between $10 and $120, depending on the service and location.
Conversely, a check may be declined for various reasons identified during the verification process. Common reasons for denial include insufficient funds in the issuer’s account, a stop payment order placed on the check, or the detection of suspicious activity. Checks that appear fraudulent, have unreadable account numbers, or are deemed too old can also be rejected. Check cashing services retain the right to decline a check based on their risk assessment and verification findings, and they are not always required to disclose specific reasons related to bank account information. In some cases, a fee may even be assessed if a check is returned unpaid after it has been cashed.