FTC challenges TeleCheck's checkered compliance with the Fair Credit Reporting Act

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Whooping it up can be fun, but hooping it up – requiring consumers to jump through hoops to exercise their rights under the Fair Credit Report Act – is illegal.  That’s one message businesses can take from the FTC’s $3.5 million settlement with TeleCheck.

Houston-based TeleCheck Services offers retailers an on-the-spot recommendation about whether to accept a shopper’s check.  Its affiliate, TRS Recovery Services – also named in the FTC’s lawsuit – handles consumer debt taken on by TeleCheck.  With over 400,000 subscribers in 375,000 locations, TeleCheck is a big name in the check authorization business.  Its recommendations are “consumer reports” as defined by the FCRA, triggering certain consumer rights.  And that’s where the FTC says TeleCheck went wrong.

Under the law, when a consumer tries to pay by check and the merchant, a TeleCheck subscriber, declines the check based on TeleCheck’s recommendation, the merchant must provide the person with a notice that tells them:

  1. that the decision was based on information provided by TeleCheck,
  2. that they have a right to get a free copy of what TeleCheck has on file about them,
  3. how to get in touch with TeleCheck, and
  4. how to exercise their legal right to dispute the accuracy of the information.

Once a consumer disputes the info, TeleCheck has an obligation under the FCRA to conduct a reasonable reinvestigation.  But according to the FTC, that’s not always what happened.

The FTC says in some cases, TeleCheck falsely told people the only valid reasons for disputes under the FCRA are the amount of the transaction, the date, and whether services were rendered.  Furthermore, the complaint alleges that TeleCheck illegally turned the tables on some consumers by putting the burden on them to reinvestigate.  For example, if consumers said they hadn’t authorized a transaction, TeleCheck sat back and told them to contact the merchant – a violation of the company’s obligation under the FCRA to reinvestigate the matter itself.

The FTC also says TeleCheck required consumers disputing information to jump through hoops in ways the law doesn’t allow.  For example, what if a consumer told TeleCheck they suspected a transaction was fraudulent?  According to the complaint, under certain circumstances, TeleCheck refused to reinvestigate or clear the disputed information from the file until the consumer submitted a police report identifying the suspect and agreed to participate in the suspect’s prosecution.

That's just one way the FTC says TeleCheck didn't live up to its FCRA obligations.  The FTC also charged that TeleCheck failed to use reasonable procedures to assure the maximum possible accuracy of the information in its files.  In addition, the complaint takes aim at TRS Recovery Services for failing to comply with requirements under the Furnisher Rule about the accuracy and integrity of the information it provides to credit reporting agencies.

The $3.5 million civil penalty is among the FTC's largest ever in an FCRA case and the proposed consent decree puts procedures in place to see that TeleCheck and TRS clean up their FCRA act in the future.

Visit the FTC’s credit reporting page for free compliance resources, including the nuts-and-bolts brochure, Consumer Reports: What Information Furnishers Need to Know.



Wow, we used to use telecheck and I always assumed they were already doing this. Our dealership quite even taking checks but they are a fairly big company. Crazy. Does this apply to the other companies like this too?
This penalty is just a big joke to Telecheck. I was once again denied writing a check for no apparent reason. Upon calling Telecheck today, 3/9/14, nothing has changed in the least bit. The agent I talked to stated that there was negative information in my profile but refused to tell me what it was or involving. Only after I started screaming at the guy and demanded a supervisor did I get anywhere. After I warned her that Telecheck is in violation of the FCRA and demanded that the information deemed negative in my report be mailed to me that she agreed to. But based on what I found in this article, I highly doubt I will ever receive that information.
How can Telecheck have me in their system not to be able to write a check. Based on an overdraft fee from a credit union and the account was closed in 2010 and this was not reported until 2012.
I too in the past had an issue where a check written and mailed to a vendor was stolen and cashed. When we filed a police report and the bank refunded our money the business who cashed the check reported our check as NSF and telecheck began declining our checks. We had do submit the police report and WAIT their normal dispute processing time before we could write a check again. Now I have recently had another check declined because as a business we do not write a lot of checks and when we do they are not ran through telecheck. So now lack of information and amount is the reason cited for declining our check even though we have been in business longer than telecheck and had this particular account for many years. When will these people be shut down?

Just yesterday, on April 29, 2015, telecheck declined my check. I had to call the number. The man told me that my check was "out of character" and I wrote another check in another store before. What the hell?????

My checks were declined too. I never wrote a bad check. I bought merchandize from Tractor Supply and while standing in line to pay only to find that the check is declined and many more customers hearing the drama that my check was declined, I was humiliated twice and filed suit not knowing the FTC 3.5 million $ settlement. I need a class action lawyer to get this 50 yr old company to pay the violations of Federal Order and then pay to consumers. FTC just kept the money.

I was flagged cause my husband owed a bank money in a disputed.
My husband is not on the account I wrote check... I called Tellecheck they stated they could not talk to me cause the reason my check was flagged was due to my husband... What...

my check was declined yesterday at a nationwide tire/auto business. I was NOT given a notice by the merchant concerning the reasons why it was declined, how to get in contact with TeleCheck nor how to exercise my rights to dispute the denial.
I was concerned and contacted my bank today. The bank has NOTHING to do with the TeleCheck process. I have plenty of money in my accounts.
My gut feeling is that the merchant had offered me a "no interest for 6 months" credit card and did not want to accept the check so the entire amount would be on the credit card.
I plan on pursuing this matter, both with TeleCheck and the merchant's corporate office.

Last Friday I went to a store I have written checks to many times, to get food for our pets.To my astonishment, my check was declined. I had more than enough money in the account to cover the check. We deposit pension and social security checks in the same account every month and write checks at the beginning of every month to pay all of our bills. In fact, on the day before I went to the pet food store, I had gone grocery shopping and paid for my purchases, like I do every month, with a check. Well I was given telecheck's phone number, called and was told that my check was denied because I had wrote so many checks that their system suspected fraud. Can someone please tell me since when paying your mortgage, car payment, utility bills, and food shopping bills are considered fraud? The girl from telecheck said that she understood my frustration since I had never had anything happen like this in the 45 years my husband and I have been married and that I have excellent credit,; but that I would be monitored for 7 days and really shouldn't write any checks. Since when is this treatment of consumers allowable?

Yesterday, my wife tried to write a check and it was declined based on Telecheck determining that it didn't match our profile. The Telecheck agent told me that she needed to not write checks for seven days to let the checks in their system clear. I think that what Telecheck is really doing is watching how many checks a consumer writes and after a certain number of checks or amount or combination of checks and amounts it just starts denying further checks. If so, this is nonsense and needs to be stopped. For the record - have a 47 year history of writing checks and haven't bounced one - ever.

Notice to Retailers - If you use Telecheck be warned. You are being added to my list of banned businesses. Places I don't spend my money. And, if there is anyway to get a Class Action Lawsuit going we will be lead plaintiff's. I am sick and tired of having my wife embarrassed and humiliated by a stupid store clerk who announces to the world that, "Your Check was Declined".


I cant agree more these people need a Federal Investigation. No one should have to put up with these jerks that make honest peoples lives miserable because they can get away with it. Theres no excuse for this to go on make the fine above 5000000 get there attention or shut them dowm????

after writing checks to anyone and all accounts, all of a sudden tele check says not to accept my wifes or my check by vendors, markets, utilities, etc. after calling them they said it would be resolved in 24 hours. next day again, will be fixed in 24 hours. next day will be fixed in 24 hours. this is absurd. then they state their computer needs to refresh. their quick to deny but slow to fix, even if they try at all. which to me it shows they don't do what they say. to bad the $3.5 million lawsuit last time did nothing. maybe it should be $3.5 billion next time. maybe that will get their attention. their system doesn't work. they need to go.

TeleCheck is still declining checks and tracking your purchases. They act untouchable and laugh when you explain that they are breaking FTC Regulations. Maybe jail time, like the rest of us get, when we do something against the rules would be beneficial, instead of chump change.

In the past couple of weeks I have had checks declined at stores where I have shopped for decades due to TeleCheck. I could not understand the sudden problem with using my checks after writing them for 43 years. TeleCheck representatives read off scripted lines about checks being out of character, or not buying large ticket items regularly. The reps say it is not a matter of credit because I have a good credit history. However, the reps blame the stores for setting the criteria while the stores say TeleCheck sets the parameters. It may come down to the lack of personal interactions at the stores because the employees do not recognize repeat customers. Sure, I could pull out the plastic but I am not about to do that after being humiliated. Besides, if I am going to use a charge card, I might as well make the purchase online at a lower price and have the item delivered. No wonder local merchants lose business to online stores if they allow TeleCheck to treat customers in such a manner. The TeleCheck rep informed me that they can only track my purchases at merchants who use that service, and I think that I will have to make a point to patronize those shops that do not.

What about the FDIC funded lending institutions? Telecheck’s 30 day hold guarantee disclosed as cash down?

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