Hassle of cashing a check

The Baltimore Sun

The Q:

Check writing is becoming more and more passe these days as online banking and the use of credit and debit cards continues to grow. Many of us, though, still cling to this old-fashioned form of payment to the chagrin of merchants who fear getting stuck with a worthless piece of a paper.

Dick Mattingly of Laurel wonders if such anxieties about bad checks are the reason he often encounters merchants and some banks asking for his driver's license and then writing the number on the check?

"What good does a driver's license number do in helping a merchant collect on bad checks, particularly, if [the] address on the license is inaccurate?" Mattingly said.

The A:

There are plenty of times when merchants have no right to personal data - such as when they ask for a phone number when you pay with a credit card or take down your Social Security number for a gym membership. But there is no prohibition against a merchant writing down your driver's license number on a personal check.

Bounced checks are a huge hassle for merchants. Between the bank fees they have to pay, the employee time spent on trying to get paid and the injury to the business's bottom line, some merchants won't accept checks anymore.

Jotting down driver's license numbers seems to be common practice, but it is not entirely clear how much that data helps a merchant collect on bad checks.

Driver's license data on the back or front of checks has no value to banks, said Alison Tavik, spokesman for the Maryland Bankers Association. In this particular scenario, it would be the merchant's responsibility - not the bank's - to collect on an unpaid check.

That said, banks must follow rules and verify customer identification, Tavik said. If a bank were to cash a check from a noncustomer, the bank could ask for a government-issued photo identification.

"This allows the bank to compare signatures, as well as match the photo of the person visually," Tavik said. "The bank is allowed to record information on the back of the check, but it is only for the purpose of recording the source of the ID used to make the positive identification."

In other words, the data is merely used to identify whether your identity was positively verified with a driver's license, passport or military identification.

"We don't use that information as a method to track people down," Tavik said. "The bank wouldn't even try to do that."

Believing the answer might lie with merchants, we contacted Tom Saquella, president of the Maryland Retailers Association.

"They do it for two reasons," Saquella said of capturing driver's license data on personal checks. "One is they use it as a form of picture ID. Yes, it really is Tom Saquella writing this check. If the check bounces, they have access to MVA records. They can access the system to verify information."

The Driver Privacy Protection Act of 1994 limits access to personal records, which means that motor vehicle administrations are "not permitted to give out anyone's personal information," said Maryland MVA spokesman Buel Young.

But the act does leave room for exceptions. Under the driver privacy act, personal information can be disclosed "for use in the normal course of business by a legitimate business or its agents, employees or contractors, but only A. to verify the accuracy of personal information submitted by the individual to the business or its agents, employees or contractors; and B. if such information as so submitted is not correct or is no longer correct, to obtain the correct information, but only for the purposes of preventing fraud by, pursuing legal remedies against, or recovering on a debt or security interest against, the individual."

Tom Mahoney, founder and director of fraud prevention group Merchant911, said that driver's license information is also helpful when merchants file police reports on various check scams.

"Passing bad checks is a criminal offense, and law enforcement can be brought in," Mahoney said. "Having the driver's license information can make their job easier. One could argue that the license only contains address information that's probably on the check already, but that license information will follow the check writer - at least in the same state. In the event that a warrant is issued, there's a good chance the writer will be found. Collecting the check is still another matter entirely."

Reach Consuming Interests by e-mail at consuming interests@baltsun .com or by phone at 410-332-6151. Find an archive of Consuming Interest columns at baltimore sun.com/consuming

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