How does a business like this go belly-up?

Widely used gift checks bounce – Page 2 – MLive.com

“Right now, they don’t have any value,” Larsen said. “We’re trying to find out what’s going on.”

In Muskegon alone, more than 100 retailers are enrolled in the CertifiChecks program, which was designed to promote locally owned businesses.

Those businesses are encouraged to post notices on their entrances that the checks will not be accepted, Larsen said.

The state and national chambers of commerce are working to get to the bottom of the problem as well, Larsen said.

The peak season for purchasing the checks was over Christmas. The checks were supposed to be good for a year.

“Maybe, if we’re lucky, because it’s been a tough economic year, that most people have spent them already,” Larsen said.

No, seriously, how? The costs of running the program are negligible (you’re printing up and issuing checks, for crying out loud) and should be entirely borne by the merchants who enroll. The company’s only job is to park the money somewhere and dole it back out as the checks get redeemed.

Well, OK, that question was really rhetorical after all. Because pretty much all of the most profitable places to park the money (and the float is why you get into the business in the first place) have turned kinda horrifically unprofitable in the past 12 months. If I were into outrage or schadenfreude I would just love to see CertifiChecks’s schedule of accounts with a list of their investments. Oh, and if I were a federal prosecutor looking to make a feel-good case, I’d love to see it too.

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