Checking the Increase of Paperhangers

Times Staff Writer

Question: This is one of those questions that has been nagging at me for a long time, so I might as well get it off my chest. When you're in a supermarket (and usually in a hurry), the guy ahead of you almost always pays with a check. Then everything comes to a screeching halt until the manager or assistant manager is called over by the check-out clerk to look the check over.

My question is: What in the world are these people looking for when they inspect these checks? Also, you almost never see them not OK a check, so what's the criteria?--T.W.

Answer: There are cynics in the law-enforcement business who would tell you that not more than one in 10 of those studious-looking store managers, poring over a customer's check, has the foggiest idea of what he is looking for.

For instance: A depressing number of those promotional "checks" that merchants send out in bulk--good for the discount amount indicated only if you buy the item being touted--are presented for payment and are cashed. Another example of keen observation: jotting down the check writer's driver's license number on the back of the check but, in the process, failing to note from the picture that the license was issued to a woman and that the check writer is indisputably a man.

All of which is doubly frustrating, according to paper-fraud expert Robert Cekosky, because roughly two-thirds of all bad checks written--amounting to about $4 billion a year and accounting for an estimated 15 cents out of every consumer dollar spent--are passed by "either flakes or amateurs," he says. These are people who aren't really all that good at their craft, are relatively easily spotted and who panic quickly.

Flakes are roughly defined as the chronically irresponsible who bounce around from one closed bank account to another (because of their not-sufficient-funds record), and the bulk of the amateurs are either on drugs or alcohol and operate in a continual haze, Cekosky adds.

And, while retailers are the prime targets, of course, anyone who ever accepts a check in payment for anything should know some of the basic facts of life about this form of paper currency, because the problem is mushrooming.

As recently as 1971 one out of every 114 checks written was bad; by '75 it was one in 89, and by '79 it was up to (or should it be down to?) one in 80. And, Cekosky emphasizes, nine out of 10 writers of bad checks are never prosecuted.

All of which puts grocers, in particular, on the horns of a real dilemma because about 85% to 90% of all food purchases are made by check. If you refuse to accept checks, you're out of business.

With a background in the credit-collection industry, Cekosky became fascinated with the mechanics of paper fraud--the basis of a high percentage of his collection efforts--but found very little helpful literature on the subject. It led him on a four-year research project and the recent publication of his "Check and Credit Card Fraud Prevention Manual," a 300-page, loose-leaf, illustrated work exploring all of the tricks of the "paperhanger's" art (available from the author, $65, P.O. Box 26118, Los Angeles 90026).

What to Check

What should those store managers be looking for when they are called in to OK a check? On this score, Cekosky borrows from a guideline familiarly known as the BAD PIES checklist, which was introduced several years ago by L. J. Riker, formerly a lieutenant in the Los Angeles Police Department's bunco/forgery division.

Sorting out the acronym, here are the important points:

B--the bank involved. Is it really a bank check--one with a name and address prominently printed on it--and with a string of magnetic coding at the bottom? If it doesn't have these features on it, there's a good chance that it's a retailer's promotional discount coupon or a counter check--which any transient can stroll in and remove from a bank's customer-service desk. Is it a local bank? It's almost impossible, Cekosky notes, to collect on a bad out-of-town check.

A--the amount of the check. Is the numerical amount exactly the same as the written amount? Is there any indication that either numbers or words have been squeezed together to "kite" an $82 check into $182? A discouraging number of checks, illustrated by the author in his manual, are passed successfully although extremely crude in execution: The dollar amount, $15 is simply kited to $115 by adding a 1 and with a clumsy addition of "One" to the "Fifteen" on the written line.

D--the date. Some pretty ancient and worthless checks squeeze through simply because the clerk didn't require the writing of it in his presence and the manager missed the age discrepancy. The older it is, the harder is it to collect.

P--the payee. Unfortunately, this sometimes rules out all two-party checks because there's no way in the world, at the point of sale, to check the validity of the first party's signature. And, if accepted and subsequently proved bad, collection or prosecution is virtually impossible without proving collusion between the two parties.

I--identification. This is getting into mushy ground because identity cards are so easily counterfeited or simply purchased over the counter (such as Social Security cards). Ideally, a "good" ID is one issued by some authority--state, federal or what have you. It should have (1) a photograph, (2) a printed physical description and (3) a signature. This is why a California driver's license is so widely accepted--but beware of any unusual thickness in the area of the photograph which could suggest that a second picture has been pasted over the first, and the entire card has been laminated. (Cekosky's manual is particularly valuable here because it illustrates a number of both valid and fraudulent IDs that are not familiar in this area--out-of-state driver's licenses, armed forces ID and the like).

E and S--for endorsement and signature. This is a subjective area, but a notoriously high percentage of bad-check passers are lousy forgers and spellers. When in doubt, have the person repeat the endorsement or signature--which puts a heavy psychological pressure on them.

With really professional bad-check artists, of course, the job gets more difficult, but a rough knowledge of what all those magnetic mouse tracks on the bottom of a check stand for can frequently blow the whistle even on a skilled pro.

Number in Corner

For openers, Cekosky points out, no check should ever be accepted that doesn't have a pre-printed number in the upper right-hand corner--a number that is repeated in the magnetic code (see illustration). And while, again, it may seem unfair, checks bearing very low numbers indicate a new account. (The average person writes about 200 checks a year, according to Cekosky.) And the unhappy fact of life is that about 90% of all accepted bad checks either have no pre-printed number or are numbered under 150.

One hotel chain, according to the author, dropped its bad-check losses from $9,000 a year to less than $800 a year by simply not accepting checks numbered under 200. It's rough on the bona fide newcomer, but it's also a fact of life that the flakes--those with no sense of responsibility in floating not-sufficient-funds checks--quickly wear out their welcome at bank after bank and end up with new accounts almost constantly.

In addition to a repetition of the check number in the magnetic code, the number of the bank--in this case 1220 (see illustration)--is also included in the magnetic code. The numbers in the upper-right corner preceding the bank number, incidentally, are keyed to the city or state headquartering the bank. Sixteen is the Los Angeles designation. (San Francisco is 11, Nevada is 94, and Delaware is 62.)

Obviously, Cekosky concedes, there's no foolproof way to avoid the occasional bad check.

"But," he added, "it's the only sort of 'holdup' that can be prevented by simply saying 'no.' "

Don G. Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.

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