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If there is one business I would never recommend to anyone this is it. Can you imagine having to collect debt from people who had no money at the time they wrote the check? I can’t imagine anything more disheartening than having to hunt down by telephone or letter and demand repayment of a debt. Yes, if you can do it you may be able to pocket the difference in what your state will allow you to collect on a bad check and the face value of the check, but after all the effort necessary to do so, it hardly seems worth it. Be sure to check your state laws though if this is the business for you.
As a merchant it is even a more dismal situation because you will only get paid on the checks your collection agency is actually able to collect on. Think of all that your debt collection agency (bad check business) has to do on your behalf to collect any money and you will realize why this is a business with a high failure rate. They have to take the debtor to court, pay filing fees, and hope to win. Once you win a judgment against a debtor you still have to collect the debt. Does this sound like a no win situation? It sure does to me.
What I would recommend to any merchant is a check guarantee system. Paying 1% on all your checks is a wise expenditure when you know that non payment is never going to be an issue. This is a strategy that makes a debt collection agency (bad check business) unnecessary.
