A couple of hundred years ago the Banks invented cheques so that they could transfer money between company accounts and between the banks themselves without actually having to risk moving large sums of cash around. When the standard of living increased in line with ordinary peoples' disposable income as the consumer society grew It became in the bankers' interests to extend this cheque system to commerce generally in order to increase the number of transactions through personal accounts. However, a cheque is only a worthless piece of paper; a promise which unscrupulous people could easily misuse. High street traders disliked the risk they were being asked to carry and cheques became such a problem in the 1960s and 1970s that in some London stores anyone paying by cheque was actually photographed holding the cheque so fraudsters could be identified! The practice of paying and getting goods instantly by cheque (i.e. using them like currency) became an every day occurrence after the banks invented the Cheque Guarantee Card, because only if a cheque was guaranteed would high-street retailers accept it as currency. The banking system now relied so heavily upon cheques that it was in danger of collapse unless the banks began to take some responsibility for it.
Today the banks have computerised and do not need cheques anymore. Cheques are a worry to them because, compared to debit cards, they have no control over what a saver spends using cheques. Their customers can put themselves into the red inadvertently, through not keeping a check on their finances. They can present cheques on the expectation of salary which can be delayed and put their account into the red unsuspectingly. Their customers can post-date lots of cheques to create a financial safety net when they know bad times are imminent, long before their overspending becomes evident in their account. Compared with debit cards (which take off your money from your computerised account instantly the sale occurs) cheques need to be handled by bank staff, and incur costs. So, cheques, upon which the banking system was built, are now a bind to banks and they want to kill them off as quickly as possible.
Over the past few years the banks have been washing their hands of their responsibility for cheques. For example, for some time now they have refused to guarantee cheques for mail-order goods even if the account holder had a cheque guarantee card. Before long they will simply stop issuing cheques. They now randomly reject payment for the slightest reason. More than ever, cheques are worthless pieces of paper. Furthermore, because the banks are unable to get blood out of a stone, once a checking account goes bad, the bank has great difficulty in claiming back its money and costs from its account holder, so they decided to throw the onus onto traders instead with swingeing bank charges for any cheques which are rejected by them. This means that, a customer who intends to defraud his bank and the trader by paying with a worthless cheque will not cost the banks anything as all charges are carried by the trader who accepts the cheque. This is because the banking cartel has a cosy internal arrangement to pass extra handling charges along the line landing the final charge with the trader who first accepted the cheque in good faith. Hence the banks are cleverly covered for their costs and can actually make a profit from fraudsters who misuse the system they have created! As you might suspect, because high-street traders are indemnifying them there is no incentive for the banks to counteract small-scale fraud and many fraudsters are now aware of this making the acceptance of cheques an even riskier business.
This is an all too common scenario: Fraudster gives dud cheque to trader. Trader pays it in and is charged a paying in fee. Trader's bank sends the cheque to Fraudster's bank. Fraudster;s bank refuses the cheque and returns it to the Traders' bank with an inter-bank charge of £15.00 which they automatically deduct from the trader's account. As the Traders' bank controlS his money supply the Trader has to stand the loss. Of course this scenario works exactly the same whether the cheque is an attempt at fraud, or whether the customer has simply overspent, or is expecting salary which is delayed. Thus even cheques which are presented by customers in good faith, are an unknown quantity and must be treated by traders as unproven. Each time that a cheque is re-presented the banks charge the trader £15.00 PLUS a bank paying in fee! A cheque given in good faith by a customer in the expectancy of there being enough money in his/her account to cover it may bounce and be returned as unpaid. That will cost the trader £15.00 plus a paying in fee, which on most transactions is more than the profit value of the sale! Hence it would have been better for the trader to simply refuse the sale at the start. Just attempting to collect this extra £15.00 may cost more than it is worth. Therefore most traders, and particularly the larger combines who take smaller average cheques are caught between a rock and a hard place. They will simply write off cheques if returned once. One can be forgiven for thinking this is a comfortable situation for the banks. The criminal is given a licence to defraud whilst the banks who are swilling in money sit back completely protected from any repercussions. They can have their cake AND eat it whilst parasitically preying on traders who are in many instances financially reliant upon them. When Gangsters offered this kind of service it used to be called extortion.
Of course many retailers are now refusing to take cheques, or levying a standard £5.00 charge on top of each cheque to compensate for this situation. Traders may eventually refuse to take cheques at all, and this is exactly what the banks want, of course, because, as an alternative, they will offer point of sale swipe terminals and debit cards and make even MORE money by charging a few percent on top of every transaction no matter how small; even if it is to buy a paper clip!
In response to recent criticisms the banks have set up a 'code of practice'. Like all voluntary codes, this is a further cynical attempt to steal a march on public opinion without reducing charges or in any way attenuating their financial tricks. One of the main reasons why the banks can get away with this is because many traders participate in their own downfall. They fear refusing cheques and limiting their income, or giving an advantage to competitors who do accept cheques therefore their customers never get to hear about what is happening behind the scenes. As long as these traders can keep on increasing their prices to ALL customers to cover the extra cost of the bank system, they will say nothing.
Here at the Sorcerer's Apprentice we do not do things this way. It is our purpose to disseminate the truth about the Ancient Wisdom, we are certainly not going to participate in the lies of the banking system to do it. There are lots of alternative methods of payment which customers can use. If they choose to pay by cheque they must realise that:
(a) We pass on the bank's charges to the cheque user.
(b) All cheques are subject to clearance before goods are despatched. There is a mandatory clearance of 14 days but this can extend to 28 days if you pay using someone else's cheque.
(c) If you have bought before we may trust your cheque and waive cheque clearance but if we do this once it does not signify it will occur every time and you must calculate on your cheque undergoing 14 or 28 days clearance on EVERY cheque you present.
(d) We do not enter into correspondence over orders paid for by cheque as we cannot find out the state of your account or whether your cheque has been paid in to your/our account unless we pay the bank an extortionate fee for doing so. If you pay by cheque then you must accept a FULL clearance delay of 14 or 28 days without quibble
(e) The banks are making life as difficult as possible for everyone who uses cheques. They will return cheques (even if you have enough money to cover in your account) if it has alterations or amendments. Do not therefore send us cheques with corrections because we will not chance incurring a £15.00 return fee to find out if they are acceptable to the bank. Each cheque must be pristine. Make out a new cheque. Do not make out cheques in different coloured ink; in pencil ; or if altered (even ;if countersigned) ; if torn; if stained with coffee, or in ANY other way which gives the banks an opportunity to return them because the risk of excess charge is simply too great to bother with them.
(f) Do not send us a post-dated cheques; do not send counter-signed cheques; do not send us someone else's cheque unless you are willing to wait 28 days.
(g) We only accept cheques which are clearly printed with the customers name (that is, we do not accept counter-cheques).
(h) Those who use cheques must agree to indemnify us for any costs levied by the bank.
(i) If we receive any cheque which, in our opinion may be subject to rejection by the banks we reserve the right to return it to you and extend clearance.
Do not blame us for this appalling situation - blame the money-sharks who are causing it in the banking system. The more people who know about this and complain about it the less likely will they be to impose more of their predatory tactics upon their customers.
Ends: Leeds October 2000
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