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Question & Answer
Question: We handle the claims in my office, and we really aren't sure when we should send an original check back (if we have it) or send a photo copy back and keep the original. Is there an easy rule?
Answer: Well, sort of easy. If you're pretty sure you're going to get the money for the check, send the original check. That would be in the case of endorsement, where the other financial institution has guaranteed the endorsement by transacting the check. If it was any time within the last three years, the Uniform Commercial Code says it's the depositary bank's problem, and they'll have to try to recover the funds. As long as they're paying you - send them the original check. We used to send it right along with the original claim form.
On the other hand, if the check is drawn on you, and you are ultimately responsible and liable for it, you can go to the other financial institution and ask them for either reimbursement or assistance. You're much more likely to get the assistance than you are the reimbursement. In that case, you'll want to just send a photocopy and hold on to the original (if you have it.)
In the case of an item you want to send through for collection, you should send the original, unless there is indemnification involved. There have been instances where the work had been filmed at the branch, before pick-up by the runner to take the bags back to the Operations Center. Unfortunately, sometimes a runner may never arrive, or the bag can be stolen on the way. In that case, the only way to collect any of the funds is with a photocopies of the items, with a letter of explanation and indemnification. It's a monster of a job, but it does work.
Copyright © 1998 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 8, No. 3, 3/98
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