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Holds On Credit Card Checks
Answer by Ken Golliher:
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Question: After getting bitten a couple of times from credit card checks (or line-of-credit checks) we decided to place 7/11 holds on all checks of this type. Recently, an external compliance auditor informed us that we cannot discriminate against any class of checks so he recommended that we send them for collection. This is causing even longer delays and confusion and it seemed that the 7/11 hold process was much better accepted by the customer. What are your thoughts on this?
Answer: Customer acceptance is not the issue. Your outside consultant was correct - you cannot place a "reasonable cause to doubt collectibility" hold on a "class" of checks. You must have a problem with the specific check in front of you.
Your options:
- refuse to accept them for deposit,
- tell the customer you will get them a cash advance if they have the card (yes, I know there is a fee and interest accrues immediately - that's their choice),
- accept them for deposit only with supervisor approval, or
- send them for collection.
There are a number of prior threads on this that you may want to research.
First published on BankersOnline.com 7/21/03
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