It has been a practice of our bank to write the account number of the account a check is being deposited into on the back of the deposited check. Does anyone see any Privacy Issues with this practice? What are other banks doing in this regard?

This is pretty common practice. Not one that I agree with.

In the strictest sense your are violating privacy... giving access to someones bank account number (with whom they already likely know, name, address, etc.), who in reality has no reason to know the other persons number.

Obviously if I give you the check I am violating my own privacy... but if I can see your account number on the back of my check image online, your privacy has been violated because I have no reason to receive that information.

Given the common practice though I don't think anyone is going to "ding" you for a violation... my thought would be if you "mask" or truncate account numbers on deposit slips, use the same logic and truncate the number on the back of the checks. That's what we have started to do.

Cheers!

Back when the GLB regulations came out the regulators put out some FAQs on interpreting them. It included an answer to that question:
"I.3. Q. I offer consumer checking accounts. I notify my customers that, among other things, I make disclosures as permitted by law. My checking account customers deposit checks made payable to my customer but drawn on a financial institution unaffiliated with me. My practice is to write my customer’s account number on the back of the deposited check to facilitate its processing. The check itself then goes to the maker’s financial institution, with my customer’s account number on the check. Is this a disclosure of nonpublic personal information that would be subject to opt out requirements or the prohibition against sharing account numbers?

A. No. The opt out provisions do not apply to disclosures in connection with servicing or processing a financial product or service that a consumer requests or authorizes. Nor do they apply to disclosures that are required, or are a usual, appropriate, or acceptable method in connection with settling, processing, clearing, transferring, reconciling or collecting amounts charged, debited or otherwise paid. §§ 216.14(a), 216.14(b)(2)(vi)(A). Also, because the account number is added to the check solely for use in processing the check and is not used in connection with marketing by a third party, this disclosure is not prohibited by the ban on disclosing account numbers for marketing purposes. § 216.12."

http://www.federalreserve.gov/boarddocs/press/general/2001/200112122/attachment.pdf

Glad Ted was here; I looked and could not find that Q & A.

Now that you know it's not a problem, ask yourself why you're doing it. When I was a teller we wrote the customer's account number of the back of "foreign" checks when we were cashing them, not accepting them for deposit. I've met bankers who believe that confers some legal right of offset against that account if it is returned. It does not.

What is does is prove that the teller established the payee was a customer. If there is a right of offset, it comes from state law or the account agreement.

I don't have a glimmer of a clue why it would be written on the back of a check deposited; the sequence number assigned by your internal processing would be a far more reliable indicator of where the proceeds went.

Even though there was no prohibition to recording the number in the privacy rules, we modified our procedure to record the customer's CIF No. instead of the actual account number. It would nothing to anyone but us.

Rant warning!

You young whippersnappers are living in the dark ages, adhering to procedures that are really old-school.

By processing a check (or image), the Bank of First Deposit is taking responsibility that the $ went to the rightful party. That is true whether or not there is an endorsement or even an account number. Now that I can make a deposit with my phone, are you going to refuse an unendorsed item?

If the item is returned, you can determine where the funds went from the sequence number or quickly and easily from your processing system.

At best, you will save a little time on the few items without information that are returned, but, since so few are returned, stopping to record the information on all the ones that are not returned is a waste of time.

I'll bet you also require your tellers to verify that there are really 50 pennies in the roll when they open one.

ok, rant over.

Al

I'd like to get a sense as to how many banks do write the account number on the back of checks deposited or cashed.

We still record the number on every check, for the simple purpose that it saves in time for research purposes. I have posed the argument that the time "saved" by writing out the number on every single check is far more than the time it would take to research any of the checks should it be needed. But, changing things we aren't required to change is just silly, apparently.