Retail customers are reaching for checkbooks instead of credit cards

"That will be $55," says a store clerk in Sears, Roebuck & Co. to a man purchasing a pair of shoes. "May I give you a check?" he asks, "I don't dare put it on my charge."

With many stores imposing somewhat tougher terms on customers who "charge it, " more and more buyers now "check it."

Since the mid-march credit crunch, many stores have reported an increase in the number of checks their customers are writing. And despite the easing of credit restrictions, retailers are maintaining higher credit-card payment minimums, and customers are continuing to reach for their checkbooks. Check usage has been growing at a 7 percent rate compounded annually.

William O'Leary, president of TeleCheck Mass East, a Massachusetts-based check verification firm which is part of a national check coverage franchise, reports a rise in the use of personal checks "moments" after subscribing stores announced the higher fees and interest rates.

With consumers not using their credit lines as much as before, "more personal-check users are springing up," says Mr. O'Leary. "Consumers who have been relying on credit- card spending seem to be trying to handle the same amount of spending -- except with checks."

Samuel Berke, president of Checkmate Inquiry Service in New York City, agrees that people are writing more checks. He says activity in his service has increased 50 percent since the credit restrictions in mid-March 1980.

"As more merchants realize they're getting less business, they're encouraging customers to pay by check -- anything to improve business," note Mr. Berke. Unfortunately, some stores report that a higher percentage if the checks are "of a rubbery consistency," or bouncing.

Mr. Berke reports that many bad checks are intentionally written. "It's a petty crime, but average customers are merely playing for time. They know they'll be able to cover it eventually, so they don't hesitate."

For instance, a young woman may see a suit she likes. Although she may not have the money to cover the purchase, she buys the suit, hoping she can get the money into the bank before the store turns in the check.

Mr. O'Leary explains that many buyers are credit-card abusers who buy merchandise they may not need, or cannot afford, without checking price tags. "Many of these people are doing the same thing with checks," he says.

Sears, Roebuck & Co., the nation's largest retailer, reported an increase in both the number of checks they are receiving and the number of bad checks being passed. However, a spokesperson from the news department, refusing to be identified, said the topic was "very sensitive" and any information is "touchy because of security reasons."

Macy's refused to give any information at all.

Montgomery Ward corporate news director Ken Darre explains that the store has experienced no increase in check usage -- bad or good. "All the stores have their own files to verify checks they receive. The only point we stress on checks is that proper identification is paramount. Valid credit cards and licenses are necessary."

Mr. Darre says the check verification services are too expensive. "We feel the cost of the service, on a national basis, is prohibitive compared to the end value."

Most check verification services charge from 1 to 5 percent commissions to the stores that use their service. Banks and credit cards take anywhere from 3 to 6 percent from the amount charged by the customer.

There are two types of check protection setups, so-called "postive" and "negative" files. The first is usually sponsored by credit bureaus. They simply provide a credit rating on the customer, keeping track of all relevant credit information.

The other kind of service, negative files, consists of the names of customers who have passed bad checks which they haven't covered. If the customer pays the balance, his name is purged from the file. Otherwise, it remains in the file so that retailers may be warned -- the customer has passed one or more bad checks -- and thus are unlikely to accept further checks.

Checkmate Inquiry Service, for instance, is a negative file operation. It is not seeking to know all about the average customer, like credit bureaus. Rather Checkmate and like services try to proteck retailers subscribing to their service.

When a customer presents a store cashier with a check, the cashier phones the check service, identifies the customer, and waits while the service searches a master file, which may provide national or regional customer information.If there is no evidence of bad checks, the customer's check is accepted.

Some services go so far as to assure compensation for the check if, despite the checking service's positive records, it turns out to be bad. Checkmate Inquiry Service does not provide this guarantee; Telecheck does.