Local liquor stores hit hard by bad checks

In his 22 years in the wine and spirits business in Fort Collins, Phil Pringle said he has never had a problem such as the one his store is experiencing now.

Pringle, owner of Pringle’s Fine Wine and Spirits in Fort Collins, said a rash of bad checks from one particular bank has caused him to stop accepting any checks drawn on that bank.

Pringle estimates that he has received between $1,000 and $2,500 worth of bounced checks from Academy Bank accounts.

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Colorado Springs-based Academy Bank has $126 million in assets and four Northern Colorado branches – three located inside Wal-Mart Supercenters in Loveland, Fort Collins and Greeley, as well as one standalone branch in Greeley.

“We just don’t take their checks at all,” Pringle said.  “This sets a precedent for us.”

Pringle’s stopped excepting Academy Bank checks about a month ago.

“I think the bank is fully responsible for this,” he said.

Pringle’s theory is that the bad checks are made possible by a product the bank calls “totally free checking.”  An ad in a recent edition of the Greeley Tribune shows that the account requires direct deposit, but offers no service charge, no money to open, unlimited check writing, as well as other banking conveniences.  

“It’s a very popular account,´ said Jessica Beyer, assistant manager at the Fort Collins branch of Academy Bank.  “It’s one of the best accounts we have.”

Beyer directed all other questions to Mary Manago in Academy’s corporate marketing office.

The account does not require that the customer’s employer provide direct deposit services, Manago explained.  She said the direct deposit can actually come from an account at another bank.

“Anybody’s eligible for it as long as they do direct deposit,” she said.  Manago said there is no minimum deposit necessary to keep the checking account free, but she was not sure if there was a minimum direct-deposit amount required.

As far as any issues dealing with bad checks from the accounts, Manago said she’s heard “absolutely nothing” about it.

“I have no further comment,” she said Sept. 8.  “We are doing further research because this is the first we’ve heard of it.”

Pringle isn’t alone in his plight.  Several other liquor stores in the area have reported issues with checks from Academy Bank customers.

Matt Dinsmore, managing partner at Wilbur’s Total Beverage in Fort Collins, said the problem with checks from Academy Bank started at his store more than a year ago.

“We still (accept the checks), but we require several forms of ID,” he said.

As for the zero-balance checking accounts in general, Dinsmore is concerned that certain people could take advantage of such a product.

“It’s a license for people to steal,” he said.

Kevin Schnulle, manager of House of Spirits in Loveland, is also worried about the large number of bad checks coming from Academy Bank customers.

“I just didn’t understand how something like that could happen,” he said.  “Never have we seen a bank with so many bad checks as Academy.”

Schnulle said his store had a large number of bad checks from Academy customers come through at the end of last year and beginning of this year.  However, he reported that the problem for House of Spirits has subsided.

“We’ve not seen any recently,” he explained.

And while the problem seems to be subsiding for some, it is worsening for others.

“We’ve certainly had an influx of bad checks from them,´ said Dave Joyce, owner of Supermarket Liquors.  The store, located a stone’s throw from the Fort Collins Academy Bank branch, has not stopped accepting Academy checks, but employees have been warned to be more diligent when taking the checks.

Joyce said the issue with Academy checks has affected Supermarket Liquor since the bank opened its Fort Collins branch.

“It’s an ongoing problem, and it’s been more of a problem in the last year,” he explained.

Joyce had also heard about Academy Bank’s checking product.

“It’s rather astounding to me that a bank would do that,” he said.  “The bank is making it awfully easy for them, but it’s still the individual that is breaking the law.”

Joyce’s conclusion about where the blame should go is right on track with the regulations provided by the Office of the Comptroller of the Currency, the regulatory agency for all nationally chartered banks such as Academy.  

“‘Free’ checking accounts are addressed in the regulations, so they are not that unusual,´ said Dean DeBuck, spokesman for the OCC.  “They would require adequate controls to manage (them) in a safe and sound manner.”

The OCC investigates reports of unsound banking practices and hands down enforcement orders to cease such activities.  Academy Bank has never been given an enforcement order.

The problem might not blanket the entire region, either. Calls to several Greeley liquor stores, some located near Academy Bank, turned up no pattern of bad checks from the bank’s customers.  

Another liquor-store owner in Fort Collins reported that he had received bad checks from Academy Bank, but didn’t feel that it was any more than he’s received from other bank customers.

An owner of a Loveland liquor store said she wasn’t aware of receiving any bad checks from Academy Bank accounts.

“Whenever we take a check, we take a risk,” Joyce said.  “I’m seeing a day in the not-to-distant future when checks won’t be accepted at all (anywhere).”

Supermarket Liquors has considered not taking checks, but the fees incurred for running credit cards are substantial enough to keep it from making that the only form of non-cash payment.

Dinsmore concurs.

“Our bad checks have gone through the roof this year,” he said.  “I understand why some places aren’t accepting checks anymore.”

Dinsmore cites customer service as the main reason Wilbur’s continues to accept checks.

“I think liquor stores have a greater portion of bad checks,” Pringle said, speaking in general terms. While large retailers have electronic scanning systems that can reject a bad check, much like rejecting a credit card, Pringle said locally owned liquor stores can’t afford such technology because of their low margins.