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Question & Answer
Question: We're having a discussion about stop payments in our shop. If a stop payment is called in, and the check is presented five days later, but we have no signed stop, can we return it for reason of "stop payment?" Suppose we do return it and the customer says he changed his mind about wanting it stopped, because he found the check, and that's the reason he didn't sign the stop payment order and return it. He had to pay a service charge because we returned it, and now he wants us to write a letter of apology and reimburse him for the service charge.
Answer: Wow! Tough customer. But he's the one with the problem, not you. He told you to stop payment…and you stopped payment. Read your stop payment form carefully (which is what he should have done.) Your stop payment form most likely follows UCC guidelines, which says the stop payment is in place for fourteen days following a verbal stop payment order. You paid the check within five days. If the customer had not notified you to remove the stop, you have no liability or obligation…other than customer relations. The problem could have been more complex if you had stopped the check 20 days after the verbal stop, with no signed stop in file. That's one of the reasons we keep close check after placing the stop on the computer to get the signed stop. You may get calls from operations checking on status. You have to take action after that 14 days, by either removing the stop or if the signed order is received, putting it on for six months.
Why six months? Mostly because that's what the UCC says in Article 4, Part 4, Section 403. Also, if the check comes in and is stopped, the information will drop from your data base - which is the main reason we punch holes in the MICR line - so it can't come through the second time and get paid. If the check never comes in, that data, if it didn't come off automatically after six months, would fill up your data storage after several years of permanent stop payments and take more posting time to run.
Most of our problems in stop payments don't come when we stop a check the customer wanted paid. It's the other way around. We get in trouble when we pay one the customer wanted stopped! Would you believe? It happens every now and then!
Copyright © 1998 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 8, No. 2, 2/98
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