CASH & CARRY NEW NO-CHECK POLICY AT SOME STORES RESOLVES BAD-DEBTS PROBLEM.

Byline: Evan Pondel Staff Writer

Behind the counter at the Candy Factory in North Hollywood sit four chocolate truffles. The only barrier between cocoa bliss and your stomach - a sign that reads ``We're sorry, we don't accept checks.''

Hit with too many bad checks, a number of businesses throughout the San Fernando Valley are on a cash or credit diet, trying to trim away the hassles of the holiday shopping season.

``We made the decision around October that we couldn't go into the holiday season taking checks ... it's basically a worthless piece of paper,'' said Frank Sheftel, owner of the Candy Factory. ``I'm even surprised places are still taking checks.''

Upon the arrival of the debit card, some thought checkbooks were on their way out for good. But, those rectangular pieces of paper are still around despite growing evidence that they reek havoc on merchants.

In October, there were more than 8,000 bad checks reported to the Los Angeles County District Attorney's Office Bad Check Program, a 14 percent rise over the same period the previous year. Last year alone, the program received leads on around 79,000 checks that bounced.

``In a bad economy people usually write more bad checks,'' said Mark MacKinniss, manager of the Bad Check Program. ``And the busiest time for us is a few months after the holidays when people start turning their checks in.''

For Sheftel, a flurry of rubber checks led him to scratch them off the list of acceptable forms of payment at the Candy Factory. Sheftel said he once received a bad check for $75 from a woman in Lawndale who had her phone disconnected.

``It was such hassle. We couldn't get in touch with her,'' he said.

So Sheftel sent the woman a certified letter, again, to no avail. Three weeks and a $20 dollar bank charge later, Sheftel is filing a formal complaint with the District Attorney's office.

``Checks just don't pay,'' he said. ``They're the easiest way to do a scam, and who are the victims? The merchants.''

According to MacKinniss, bad checks aren't just a Los Angeles County phenomenon: More than 1.2 million bad checks are written daily by U.S. consumers. In 1999, the most recent year for which figures are available, U.S. consumers wrote 68 billion checks. Over 610 million of those checks bounced, accounting for a loss of $19.9 billion.

``We take these cases seriously,'' MacKinniss said. ``And if merchants are smart they'll get away from accepting written checks.''

Most of the bad checks MacKinniss receives come from merchants, but the program does work with other people interested in collecting restitution. MacKinniss said working with the District Attorney's Office is more appealing than with private collection agencies because it's free.

To report a bad check to the district attorney, merchants are required to document at least one attempt to collect from the rubber-check writer. The check writer must have 10 days to respond to the merchant. If the check writer doesn't respond, merchants fill out a complaint form with the original check attached.

MacKinniss said private collection agencies have recovery rates hovering around 28 percent. However, the district attorney has a restitution success rate of 40 percent to 50 percent.

'`It sounds pretty good, but you still have to factor in that we're not able to get restitution on 50 percent of the checks we receive,'' MacKinniss said. ``If we're not able recover the check's amount, people always have the option of going through civil courts.''

To avoid the nuisance of chasing a bouncing check, merchants can also stop accepting them. Kent Schrock, director of marketing for Fujitsu Transaction Solutions Inc., sells automated teller machines to various establishments.

``Many retailers are finding it better to have a cash dispensing device because it brings people into the store,'' Schrock said. ``And for the consumer, it's a lot more inviting to walk into a well-lighted establishment than an ATM machine on a dark corner.''

Even so, dispensing cash doesn't come without a price tag. The average ATM machine costs around $6,000, while the more elaborate machines are about $20,000.

For the consumer, the awkward shape of a checkbook is almost a good enough reason to carry only plastic and cash. Mary Trigg, a spokeswoman for Wells Fargo, said more people are using debit cards because of the convenience of carrying the card in a wallet and the ability to check your balance immediately online.

Though Trigg wouldn't confirm that more people are opting to use debit cards over checkbooks, she did say going strictly plastic is a growing trend.

Even though in the near future there will always be some transaction where a check is the preferred method of payment, ``10 years from now, whipping out your checkbook to pay for groceries will be like throwing down a bunch of silver dollars,'' MacKinniss said. ``We're going to a plastic world because it's much easier for the consumer, and it's much more secure for the merchant.''

CAPTION(S):

2 photos

Photo:

(1 -- color) Frank Sheftel mans the cash register at his store, the Candy Factory in North Hollywood, where check payments are no longer accepted.

(2) no caption (Dollar bills)

Tom Mendoza/Staff Photographer