Money Buzz 10/01

What to do to protect yourself from check fraud, the ins and outs of variable rate credit cards and more
From the October 2001 issue of Entrepreneur

Does the $12 billion to $15 billion a year the Office of the Comptroller of the Currency estimates is lost to check fraud affect you? If you think it's your bank's concern, times have changed. The Uniform Commercial Code was altered in the early 1990s to transfer check-fraud liability from the banks to their business customers, and entrepreneurs were hit hard.

Maybe it's time to worry about rogues duplicating your business's checks-an increasing threat with today's printing technology. Some banks, including Fleet and Wachovia, offer positive pay service, a system that allows you to log each check your accounting system generates. The bank then matches your record with the numbers on incoming checks; if they don't add up, the bank can deny payment.

Banks usually don't charge much for the service, but you will need software. You can get front-end packages from companies such as AcuPrint, IPS and Prelude Software. AcuPrint's SecurePay 2000 ($1,495), for example, automatically translates accounting information into the chosen bank's format, making communication easy.

Not in the Cards

If you're waiting for the rate on your variable rate credit card to fall in tandem with the Fed's latest round of cuts, you might be waiting for quite some time. In fact, some cards are now hitting their rate "floors," or the minimum APRs allowed by the cardholder agreements, which are usually prime plus 9 or 10 percent. Floor rates are nothing new, says Robert B. McKinley, CEO of CardWeb.com, a firm that tracks the payment card industry. "But prime rates have dropped to such a low level, they've bumped into floors," he says.

Not all variable rate cards have floors. Banc One/First USA and Wells Fargo are two that typically impose minimum APRs, while Juniper Bank adjusts rates monthly according to Greenspan's reductions. If your card has a floor, you can try complaining to the bank that issued it, says McKinley, or go shopping for another card. "You shouldn't be paying more than 11 or 12 percent for a credit card today," he says, but adds that rates lower than that tend to have annual fees or smaller credit limits.

For those who carry substantial balances on their accounts, however, it's well worth the time to investigate variable card rates, how often they're adjusted, and whether floors exist, says Catherine Williams, president of the Consumer Credit Counseling Service of Greater Chicago. Says Williams, "[People] need to maximize their dollars as much as they can."

Sugar Daddies

It's not often you hear a VC say return isn't everything. But the Hot Fudge Venture Fund, a $5 million fund started by Ben Cohen, the "Ben" half of ice-cream-maker Ben & Jerry's Homemade, wasn't designed to maximize return-at least not in dollars.

The Atlanta-based fund invests in start-ups and existing companies geared toward developing high-quality jobs in low-income areas and distressed communities, says the fund's CEO, Pierre Ferrari. The fund has invested in three small businesses so far, including Juniper Bakery, a for-profit business run by a Memphis nonprofit organization, which funnels its profits to an apprenticeship program to train bakers from minority communities.

In general, the fund concentrates on consumer products, light manufacturing and industries familiar to Ferrari and the team of executives and entrepreneurs he contracts with. "We're not going to do high-tech," says Ferrari, "because we just don't understand it."


C.J. Prince is a New York City writer who specializes in business topics and the executive editor of Chief Executive magazine.

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