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Question & Answer
Question: Can we put a stop payment on an official check? Our customer was power of attorney on an account, and was removed. We didn't notice the P of A had been removed, and when she came in for a large tellers check, we debited the account and gave her the check - payable to her. Our account holder is screaming, and our legal people tell me I can't put a stop on. Can we?
Answer: Well, I'm going to get into trouble with your legal people. No, you can't put a stop on an official check - it's an obligation of the bank. Having said that, I can tell you very frankly I returned a lot of official checks stamped "Payment Stopped" in my 15 years in the banking industry! And I'd be willing to bet you've gotten some back too.
If a check was fraudulently obtained, I attempted to return the check. For instance, we had a man come in with bad checks and buy a very large certificate of deposit. Two days later he came in to surrender the certificate, taking the penalty, and walking away with an official check. The next day we got a call that the checks used to purchase the CD were counterfeits. When I called general ledger, I found the official check was already in for payment that day. I called the bank where it was deposited, and returned the check "Payment Stopped - Fraudulently Obtained." Fortunately, they had not yet paid out on it, they cooperated, and we came out whole.
If the funds are still in the bank of deposit, you have a good chance of returning the check and recovering your money. It certainly is worth a try.
The time that you can't return it is if it is presented to you by a holder in due course. To put it as simply as possible, if a third party accepted the check from the presenter/payee, that third party has no way of knowing there is anything wrong with the check. In that case, you really would have to do some fancy telephoning to recover your money.
Networking with security officers is never more important than when trying to return an official check for reason of "Payment Stopped!"
Copyright © 1998 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 8, No. 12, 12/98
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