Hot checks burn businesses

Some shops, restaurants considering changing payment policies

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Craig is a town where people still can buy goods and services with nothing more than a signature on a small rectangle of paper.

Sometimes businesses don't even ask for identification.

It's a small-town way of doing things that harks back to a time when a handshake was a contract, a signature a vow.

But for some businesses, accepting personal checks is becoming so costly owners are considering doing what their big city counterparts did years ago --efusing them.

"I'm seriously debating the issue," said Chris Nichols, who owns McDonald's restaurants in Craig and Steamboat Springs. "We're trying to limit our exposure on checks as much as we can."

Bouncing billions

In Steamboat, hot checks aren't much of a problem. But in Craig, customers wrote 42 bad checks to McDonald's in September -- the worst month last year. Because of bad checks that month, the restaurant was out $89 in food costs and $336, including services and processing fees, bringing the total to $425.

McDonald's sends checks through banks twice. Each time, it costs the business $4 in processing fees.

"We all make mistakes occasionally in our checkbooks," Nichols said. "The biggest thing that bothers me is the person gets notified by the bank before I do and instead of making an effort to pay the checks, they continue to write hot checks everywhere."

Bad check writers in Moffat County have good company. U.S. consumers bounced 200 million checks in 2003, or about 548,000 a day, valued at about $151.2 billion, according to a payment study by the Federal Reserve.

Despite the costs, some Craig businesses said they have little choice but to accept personal checks or risk losing customers.

If any Craig business knows about bad checks, it's Mathers' Bar on Yampa Avenue.

Up in smoke

When a fire destroyed the bar in the 1950s, $60,000 to $70,000 worth of hot checks burned with it. The business never collected on them. When owner Tom Mathers bought the business from his father in 1972, the bar had $100,000 worth of bad checks. Tom's father usually threw bad checks in the garbage and sympathized with customers who issued them.

"He always said, 'They need the money more than I do,'" Mathers said.

Since 1972, customers have passed between $30,000 to $40,000 in hot checks at the bar.

Mathers' Bar doesn't shrug off hot checks anymore.

A few years ago, the bar hired a collection agency, which has about an 80 percent success rate in getting customers to make good on bad checks, he said. It also installed a credit-card machine.

'It's business'

Although it has a tougher stance on insufficient funds, the bar won't stop taking personal checks, Mathers said.

"It's very important to take checks in a small town," he said. "It's business; when I go some place, they take my check and they know I'm a local businessman. That's how people deal with money."

Chris LeBlanc, who helps his family manage La Plaza Restaurant in Craig, said some customers have passed bad checks. A few months ago, the restaurant displayed returned checks for everyone to see. The restaurant also enforced stricter policies.

Bad checks aren't much a problem for the restaurant lately, he said.

"When all that happened, the locals were very supportive and very understanding of our extra precautions," LeBlanc said.

During the holidays, Mc----Donald's decided not to take checks for gift cards and also has gotten stricter about accepting checks from new bank accounts.

Small town way

But payment policies can be tricky, Nichols said. And confronting customers about bad checks can be awkward, especially if he knows them, he said.

"I think accepting checks is a trademark of a small town," he said. "But if you don't know everybody, that's when the problems come into play. How do you take checks from some people and not from others?"

Nichols also has displayed bad checks on bulletin boards for everyone to see.

"People who wrote the bad checks were appalled," he said.

Nichols also uses a collection agency.

More and more businesses are going to the police to report customers who won't pay for bad checks.

Michelle Anderson, investigative technician for the Craig Police Department, said her department contacts issuers of bad checks through letters. If they don't respond to the letters, police take the case through the judicial system and courts.

In 2004, Anderson's office sought prosecution for 67 bad checks, compared with 74 in 2005.

Businesses are catching on that the service is available at the Craig Police Department.

Bad checks are bad business, Nichols said.

"To me, how is it any different from walking in and shoplifting," he said.

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