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Question & Answer
Question: If we receive a check back for reason "Non-Sufficient Funds" and just turn it around and redeposit it for our customer, does the drawee bank have extra days to return it a second time? It sometimes takes a lot longer for the check to come back if it is returned unpaid the second time around.
Answer: No. If a check is returned for reason "NSF" or "Missing Endorsement"* many financial institutions follow the practice of redepositing items below a certain amount without returning them to the customer. For instance, the cut-off may be $200. A check for $200 (or less) is deposited by the customer, sent through for collection, returned, charged back to the customer, then immediately redeposited to the customer's account, and put right back through the work. The second deposit is treated just like the first, and must be on its way back by midnight of the day following receipt by the drawee bank. In our conversation, you mentioned the redeposit was accomplished by inserting it into a holder. Anything that takes special handling at Fed will delay presentment, and those holders won't usually go through high speed equipment. The people at Fed will sometimes pull them out of the work and process them by hand, which slows them up.
Back in the "good-old-days" when Fed was sorting by hand, (even before our time!) Fed used to stamp checks with a star the second time through, indicating they wouldn't handle them more than twice. Now, many of our return item departments punch a hole in the MICR line if they are returned the second time, so they won't be sent through again.
*Lest I confuse anyone, a check returned for "Missing Endorsement", if properly deposited into the payee's account, will be stamped "Credited to the account of the within named payee" before redepositing.
Copyright © 1996 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 7, No. 1, 12/96
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