Consumer Desperation Index falls to 95
I love December. Christmas. Good tidings to you and all of your friends. And, for the second year in a row, the Consumer Desperation Index falls. It does my heart good to see less fraud going on, as far a check cashing goes, during the holidays. Perhaps it has to do with the typical uptick in consumer spending and therefore jobs for people who want to work. Or maybe it is just the Christmas spirit?
This month, I’d like to take a different tack on Desperation. We typically speak about the people so desperate for money that they commit a crime. There is a different kind of desperation that the unbanked feel and that is finding a place to respect their financial transactions. They are hardworking people who get their one or two paychecks a month and pick up a job on the side. They have their places to go to cash those checks. Wal-Mart, the local gas station or maybe the liquor store. Then, suddenly, their aunt dies and leaves them $17,000. Now what?
You might say, “Go to a bank and open a bank account”. Well, what if their financial situation doesn’t let them pass muster with the bank? You and I may not understand this, but it is a common issue.
You might say, “Go to a bank and cash it”. Sorry. Unless there is a local branch for the bank that the check is written on, this is also not an option. Banks will require a wait time, which requires an account, which says we are back to square one.
That is why I love what we are doing at Chexar, because we’ve built a system to handle any check, any size. We enable a Chexar-supported location to be that everyday financial services center for those people desperate to be respected in their financial needs.
We recently had a customer visit one of our clients with a check for over $200,000. It was a settlement check from the state. He had been wrongly jailed and served his sentence, passing over parole opportunities because as part of getting parole, he would have had to admit guilt. After getting out, he successfully sued the state for wrongful imprisonment. It took years. But he had already given years in prison. The day he got his check, he wanted to celebrate. He wasn’t as concerned about the money as he was the justice, and he was going to buy a car that day for his mom.
Of course, anywhere he went, a bank wanted a five day hold. He knew Wal-Mart wasn’t handling that $200,000 check. Instead he found a Chexar-supported location. We did the due diligence, approved the check, and he was able to deliver the victory gift that day, the day of his settlement proving him right. Did he pay a fee to cash the check? Yes, a big one. He knew the fee. He accepted the fee, and he was pleased as punch that he found a place willing to handle his financial matters.
The gentleman ended up depositing most of the check into a newly created bank account at our Chexar client. The Chexar client had serviced the customer AND created a new banking relationship.
We love helping desperate honest people.
The “Consumer Desperation Index
Each month, Chexar validates hundreds of thousands of check transactions across the country. A certain percentage of these are stopped because Chexar has deemed them as “DO NOT CASH” transactions. This means Chexar risk specialists have discovered that the check is fraudulent, the account is closed, there are non-sufficient funds, or the activity in the maker’s account is suspicious. By comparing the percentage in the current month to the percentage in March of 2010, an index is created, with March 2010 as a baseline at 100.We have named it the “Consumer Desperation Index” because consumers have to be really desperate to resort to check fraud. In most cases, the check conversion location has their picture, a copy of their ID, their signature, and often a fingerprint. They are just hoping they chose a retail location that doesn’t know how to control fraud. Ultimately these culprits will be locked out of the financial system by way of their negative record with Chexar.
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