Bad Check Business

I've had experience with a bad check business in the past and have some advice to anyone who wants to start a bad check business. First off, check your state laws to see what can be recovered from a bad check. In Florida here you can collect three times the face value of a bad check, and since most bad check businesses pay the face value of the check, you can see how they make a profit.

One of the problems if you're a merchant using a bad check collection agency is they only pay on ones they collect. Compared to a check guarantee place where you pay one percent on your checks and they guarantee they will all be good this isn't such a great deal. With a check guarantee system you pay the fee of one percent on all checks, but at least you know they are all going to be paid.

I've send dozens of bad checks over the years to a bad check collection agency and so far they have only collected on one check. The success rate of a bad check business is dismally low. If you're looking to start one I'd recommend against it. In order to collect you usually have to take the person to court, just the filing fees and time isn't going to be worth it for a $100 check. If you win (like if they don't show up and you get a default judgement) then you still have to collect the court award, and you start all over again trying to collect from them. Add to that the fact that the check bounced in the first place because they don't have the money and you can see what a hard business this would be to do every day.

From a merchants point of view, a check guarantee system is the best piece of mind compared to the extremely low success rate a collection agency has. The one percent is short money you'll pay to know they are all going to be paid and you'll never have to mess around. As far as starting a bad check business I would rather do just about anything else. The thought of calling and sending threatening letters to people when almost all of them won't pay, or show up for court, sounds like a terrible business to be in. When you're starting a business the only motivation you have is yourself, and this sounds like something few people would enjoy or see results in. I'd stay away from the bad check business.

Since I review business opportunities and internet gurus all day for a living, you can guess I know which ones work and which ones don't. Click here to see how I make my money.

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