The scenario: The collections company calls a delinquent customer
concerning a bill six months past due. The customer says, "I just
mailed that check yesterday, so you should be receiving it in a few
days." A few days and then a couple of weeks pass by until, yet
again, the collections company must make another call to request
Two California businessmen tired of listening to the "check is in
the mail" story decided to do something about it by expanding the
technology of the demand draft. Rick Reller, who owned a leasing
company, and Thomas Mudry, who has a direct mail company, conceived
the idea of Checks-by-Fax.
The system allows a company's customer to pay for items by fax,
over the telephone or through e-mail.
Using the Checks-by-Fax software, users enter the customer's
information and then print a bank draft on check paper guaranteed to
meet all Federal Reserve and American Bankers Association
That draft is then taken to the financial institution for immediate
deposit in the registered user's account.
This form of payment accelerates cash flow, increases collections,
reduces paperwork and lowers electronic fund transfer and credit
service fees, said Michael R. Murray, owner of Checks-by-Fax of
Oklahoma, an affiliate of Checks-by-Fax based in Beverly Hills,
Some financial institutions and associations, however, are
cautioning consumers regarding this method of payment, saying it is
an easy vehicle for fraud and will ultimately end up costing banking
customers more for their checking services.
"What I would like to stress is that this is perfectly, completely
legal," Reller said.
"We have a 100 percent money-back guarantee, no questions asked,
if the software doesn't do exactly what we say it would do."
The most logical purchaser of the Checks-by-Fax system is a
corporation that has a large collection department responsible for
collecting money on contracts, according to Reller.
"Our target market as far as industry groups includes leasing
and/or financing companies, insurance companies and agencies,
mortgage lenders and mortgage bankers, property management
all commercial collection agencies, major manufacturers, catalog
sales and all utility companies in the U.S.," Reller said.
The Checks-by-Fax system "eliminates most if not all of the
`checks in the mail' syndrome," Murray said.
"Using this service gives the user a lot more control and a lot
more profit. Also there are a surprising number of people who don't
have a Visa or MasterCard, who really prefer to pay by checks,"
Reller said, adding that the product is as safe as the use of a
The company said it has taken several security precautions to
lessen the opportunities for misuse of the system.
"It is no different actually than writing a check for purchase
across the counter or sending a check in the mail. The same
information is being transferred in a more convenient and effective
manner," Murray said.
In cases of misuse, the source of any wrongfully issued check can
be identified by magnetic coding used in the system, he said.
Software purchasers are registered with Checks-by-Fax by a serial
number. The number is imprinted on each check or draft in an
unobtrusive spot, allowing the company to track down any case of
fraudulent use of the software.
"We also have a lot of protection involved in the system itself,
such as passwords used to get into the system just to be able to
operate it. Also, our safeguards are so stringent that companies
cannot move this software from one machine to another within their
facility without us having to unlock it," Reller said. …