Checking the Bouncers

Armed with blank check, ballpoint pen and driver's license for identification, almost any American can cash a check at his friendly neighborhood supermarket or liquor store. This shirtsleeves casualness about money has ballooned bad-check losses in the U.S. to an estimated $1 billion a year. But bum-check pushers may shortly find their livelihood threatened by automation. In Los Angeles, a pair of science-minded entrepreneurs are using a digital computer to blot out what J. Edgar Hoover calls "fountain-pen bandits."

An IBM Ramac 305 computer is the soul of a profitable, year-old company called Telecredit, Inc., bossed by Chairman Robert Goldman, 36, an electrical engineer, and President Ronald Katz, 26, a businesslike onetime assistant dean of students at U.C.L.A. The computer at Telecredit headquarters is programmed with the name, number and physical description recorded on each of California's 8,500,000 drivers' licenses, and with the latest police reports on check forgeries or thefts. When a stranger wants to cash a check with a Telecredit subscriber, the subscriber asks for his driver's license and reports the license number to Telecredit over a direct phone line.

A Telecredit operator then punches the number on a keyboard, transmitting it to the computer. The computer can handle up to 24 check queries simultaneously, and flashes back its answers on a closed circuit television screen. A warning goes up whenever the driver's license has been reported lost or stolen, and whenever the license holder has been reported for bouncing checks or has tried to pass a suspiciously large number of checks within recent days.

Subscribers pay $30 a month for the direct telephone line to Telecredit, plus 20-c- each for every inquiry above 150. So far, 400 Los Angeles companies have signed up, including Sears, Montgomery Ward, the May Co., and almost all major supermarket chains in the area. Katz and Goldman expect to expand into San Francisco and San Diego this year, then reach eastward. One of their sales points: the number of bad checks passed in Los Angeles declined almost 10% in 1962.

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