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Question & Answer
Question: When we receive returned checks that have been deposited to our customer's accounts, we return them to our customers. Our question is, if this puts our customer's account in an overdraft situation, does it hurt us to return the actual item deposited? Or, should we keep the actual item until the overdraft has been taken care of?
Answer: Yes, you should hold on to some checks that create an overdraft on an account - particularly if it smacks of fraud. In those cases, if you send the returned check to the depositor, you have effectively gotten rid of your evidence. We used to send a letter with a reduced copy of the check to the depositor with a "Please contact the writer immediately regarding an overdraft on your account caused by the charging back of the deposited item, copy of which is enclosed." letter. Many exceptions, of course, will exist - such as supermarket deposits, or other commercial account deposits where many checks come in and are returned, deposited items are going to be their problem, not yours.
Copyright © 2000 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 10, No. 1, 1/00
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