From: konstan@elmer-fudd.cs.berkeley.edu (Joe Konstan)
Newsgroups: misc.consumers
Subject: Re: Endorsing checks for deposit via ink stamp?
Date: 3 Sep 1992 21:59:41 GMT
Organization: Picasso Research Group, UCB Computer Science Division
Distribution: world
NNTP-Posting-Host: elmer-fudd.cs.berkeley.edu

In article <Bu0sKp.9xw@news.cso.uiuc.edu>, tmkk@uiuc.edu (Khan) writes:
|> 
|> In article <minor.715466156@coal8> minor@rtsg.mot.com (Kevin Minor) writes:
|> >
|> >Here's another twist:
|> >I once wrote one a check for a telephone bill but unfortunately, I 
|> >mis-read the amount and wrote the check out for an amount slightly less
|> >than what was due. [...] I found out that the bank had
|> >cleared my check for the correct amount of my bill due instead of
|> >the amount that I wrote the check out for.
|> 
|> This is truly scary. What I want to know is, how did your bank know the
|> amount on your bill? The only scenario I can come up with is that the
|> phone company filled out a deposit slip for the amount shown on your
|> bill, and when the person who checked in the deposit got to your check,
|> either they didn't look at the check closely and simply typed in the
|> amount shown on the deposit slip, or the clerk DID see the discrepancy
|> and decided to resolve the error in the phone company's favor.

Actually, most large businesses that process checks encode the check amount
on the bottom (right) of the check in magnetic ink (saves the bank the 
trouble of doing the same).  When a bank receives checks from such a 
source, they can process them mechanically, rather than looking at
each check.  So, in this case, the clerk probably made a mistake, but
nobody is likely to complain much since the mistake was minor and 
avoided a late charge.  I imagine that a single complaint might not
do much anyway, since it could be considered a "processing error" though 
you would clearly get back your money.  If a company did this too often, 
"processing error" would become "fraud."

|> Another (slightly related) question: what do they do with those slots on
|> the bills that ask you to write in the amount you've paid? What hjappens
|> if you fill in the wrong amount? Let's say I have a VISA card with a
|> $1000 balance, and I write a check for $200 but write $1000 in the
|> "amount paid" slot. What would happen? Would the bank cash my check for
|> $1000, even though it was only written for $200?

Most places will check the two and verify that they are the same.  If they
are not, the amount you wrote the check for is paid and credited.  I imagine
that an occasional slip-up might occur, but payment-processing facilities 
have all sorts of methods for double-checking stacks of bills.

What I wonder about is what you could do with your own MICR (magnetic
ink character recognition) printer.  You could certainly encode your own
checks to ensure that nobody else changed the amount (though they might
overprint your characters rendering the check unreadable by machine).  
What would happen if you wrote out a check for $1000, but encoded it for
$200?  Eventually, this could be tracked down since the banks keep 
copies of checks, but I'd be interested in how quickly something like this 
would be caught.  

Don't try this at home.  Don't try this at work, either.

Joe Konstan
Newsgroups: misc.consumers,misc.consumers.house