How to Avoid Bad Checks From Customers

Follow these rules for accepting checks for payments

Close-up of a fountain pen on a check
Photo: Glowimages / Getty Images

Paper checks are less common than they used to be, but they haven't been phased out completely. In fact, 6.51% of non-cash payments made in 2020 were made by check, so there are still plenty of people who insist on paying by check.

Some businesses still have a lot to gain by accepting checks for payment. For example, certain businesses don't accept debit or credit cards because of processing fees. Similarly, some small-scale ventures aren't set up to be merchants at all.

The challenge for these businesses is how to avoid bad checks. You never know for sure if customers have money in their checking accounts, and it is expensive and time-consuming when checks bounce. By putting in place an iron-clad policy for accepting checks, you can reduce the odds of cashing a bad check from a customer and later paying the price.

Check the ID

If you don't already, start verifying a check writer’s identification to ensure that the person handing you the check is the same person who owns the account. For example, request to see the person's driver's license. Also, check (and copy down) the address on the ID to see if it matches the address on the check. It's also a good practice to write the ID number on the check itself, but don't let the customer write the ID number on the check ahead of time, as they may supply false numbers.

If the addresses don't match, it doesn't mean you're getting a bad check, but this, in combination with other red flags, might signal a problem. By the same token, avoid accepting checks for payment with temporary addresses, such as post office boxes or hotels.

Watch the Signature

Insist that all checks are signed at your place of business (assuming customers come to your place of business) and in your presence; never accept pre-signed checks. You want to actually see the person sign because a thief can grab a legitimately signed check, alter it, and bring it into your business.

If the signature isn't legible, ask the customer to print their name on the check. Compare that signature to the signature on the ID that you obtained to make sure that you're dealing with the same person.

Get Contact Information

Ensure that the customer's contact information is printed on the check. If it's not, or it's not up to date, request a current address and telephone number. If something goes wrong with the payment, the first step is to contact the customer and let them know, so valid contact information is essential.

If incorrect information is supplied, it might have been an honest mistake that the customer can quickly fix; if not, you might need to notify the customer in writing before taking legal action.

Take a Closer Look

Inspect the check to determine whether it was printed by a professional check printer or was potentially created by a professional thief. Check to see if the edges are cleanly cut and square, and look for security features on the check, such as watermarks or microprinted words that are so small that they are barely distinguishable to the naked eye.

Likewise, look for any signs of tampering, including crossed-out or rewritten marks, handwritten letters or numbers outside of the fillable lines, different ink, smudging, or wear in suspicious places. Rejecting payments that have been tampered with can help you avoid cashing a bad check. 

Verify the Check Number

Use extra caution if the check is from a new account. The way to determine the relative age of an account is to look at the check number. A low number (125 or below) usually means that it's the first checkbook issued for that account. That said, anybody can ask to start their checks at a higher number, so don't assume that check 9900 is necessarily from a seasoned account. Likewise, don't accept checks with no number or a hand-written number.


Approximately 90% of bad checks come from bank accounts that are less than one year old, so be suspicious of checks that have a check number that's lower than 125.

Validate the Amount

Review the amount written on the "Pay to the order of" line and ensure that it matches the figure in the numeric amount box. For example, a check that spells out "Fifteen hundred and 50/100 dollars" should include $1500.50 in the numeric amount box.

If a discrepancy arises between the two, the bank will honor the pay-to amount. A fraudster could, therefore, write a higher number in the numeric amount box and an illegible lowball number on the pay-to line to wiggle out of paying what he actually owes.

Require the Current Date

Insist that checks be written with today's date on them only. If the customer puts a date in the future, also known as a post-dated check, refuse to accept it. You should be able to cash the check right away rather than have to wait for a future date.

And if you are dealing with a fraudulent payer, the delayed arrival of funds caused by a post-dated check may allow them to hit the road before you notice that the check bounced.

Keep It Local

If possible, stick to checks that come from customers who live in the same state as your business, or at the very least, from people who hold an account at a local financial institution.

Sure, people move, and a certain portion of your customer base might be on vacation at any given time, but the risks are higher with an out-of-state check. This is because you can't easily contact the bank if needed to validate the check. You may have to waste time doing research to determine whether the out-of-state bank exists.

Verify Funds

When in doubt, contact the check writer's bank and ask to verify funds in the customer's accounts before accepting the check to ensure that they actually have the funds that they wrote the check against. This is particularly useful for large check amounts, as it can help you avoid cashing a bad check that later bounces and causes you to miss out on a payment that your business relies upon. The bank might refuse your request, and there's no guarantee that the funds will be there even if the bank does verify funds, but it's worth a shot.

You can also sign up for a third-party check verification service to help flag suspicious checks. These services carry out a range of tasks to reduce the risk of accepting checks for payment, including determining whether a checking account is valid and has a positive balance.

Don’t Spend It Right Away

Remember that a check can always be returned, which means that the bank can't validate it. This process might take longer than you expect. The check clearing process is confusing because your bank may allow you to withdraw or spend some (or all) of the funds from a check, usually within two days, whereas it could take weeks for it to become clear that a check is "bad."

If the check bounces after you’ve spent the money, you'll have to repay the bank. To avoid the repercussions of cashing a bad check, wait 30 days before dipping into the funds from the newly deposited check, or longer if you have any doubt. Read your bank's policy for accepting checks or contact your bank to find out when you’ll know that the money has actually arrived.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Board of Governors of the Federal Reserve System. "Federal Reserve Payments Study."

  2. BBVA. "Checks and the People Who Still Use Them."

  3. Santa Cruz County Attorney's Office. "Santa Cruz County Attorney's Office Bad Check Program Guidebook," Page 4.

  4. The New York State Office of the Attorney General. "Ten Tips for Avoiding a Bad Check," Page 1.

  5. Bureau of the Fiscal Service of the U.S. Department of the Treasury. "U.S. Treasury Check Features."

  6. Humboldt County District Attorney's Office. "Check Acceptance Guidelines," Page 1.

  7. First Texoma National Bank. "Personal Services."

  8. Victory Payments. "Verify Real-Time Status of Your Customers Bank Account in Less Than 1 Second."

  9. Citizens Bank. "What Does It Mean When a Check Is Returned?"

  10. Federal Trade Commission. "How to Spot, Avoid and Report Fake Check Scams."

  11. Consumer Financial Protection Bureau. "How Quickly Can I Get Money After I Deposit a Check Into My Checking Account? What Is a Deposit Hold?"

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