At one time a person was required to have at least two pieces of identification before cashing a check. Usually one piece of ill had to be a major credit card or check guarantee card. On the West Coast, larger stores seldom ask for a credit card, and some do not even require a driver's license. What happened? Many merchants now use sophisticated computer systems or outside services to guarantee the credit worthiness of customers cashing checks. Target stores, for example, use an in-store system that works based on your checking account number.
If you have cashed a check in the store before and the computer recognizes the number, it will approve your check. Smaller merchants may hire an outside service to guarantee its customer's checks (for a small fee, of course). The merchant simply runs a driver's license number through a terminal, and the check guarantee service cross-references your driver's license number with its files to see if any bad checks have ever been processed through their system. This kind of service is probably not alarming to most consumers, who correctly balance their check books, but in the case of fraud or when a wallet and check book are stolen and used in a store by someone else (who really looks at the photo?), the consequences can be catastrophic. Since these checking information databanks do not consider themselves covered by the Fair Credit Reporting Act, there is little recourse for the consumer. Another database that many consumers are not aware of is that of CHEX systems.
This is a database used by banks to access information about accounts a new applicant may have held at other banks. If a bank account has been closed or money is owed to a bank in relationship to a bank account, it is reported to CHEX systems. The information is left on the report for five years (compared to seven years on a credit report) and can be disputed in much the same way as a credit report, although it is unclear whether this reporting agency is covered under the Fair Credit Reporting Act. Computers have created the consumer credit boom. What were once scattered bits of public information can now be consolidated into one computer and accessed at lightening speed, thanks to Texas Instruments and the Japanese computer chip industry. Information from computers is difficult for many of us to understand, and when credit bureaus intentionally make computer printouts difficult to decipher, the process of understanding your credit report becomes almost impossible.
