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#115446 - 09/18/03 04:48 AM late return and collection item
cjdod Offline
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Joined: Feb 2003
Posts: 145
Hello, Can someone please explain to me the difference between a collection item and a late return. I thought I understood the difference, I thought an incoming collection item was an item drawn on our bank, written by one of our customers. Is this correct?

What initiated my state of confustion was another bank ( rather large bank) with credit card customers. One of the customers had their cash advance checks stolen, those checks we all get in the mail seemingly on a daily basis promising us oodles of money for only 1.9%. The bank called to inform us that they were returning two checks totaling close to $3,000. I found images of the checks deposited at our institution and noticed they were deposited in July 03. When I asked the fraud dept rep about their date of deposit she confirmed that it was in July. I explained that regardless of the fact that these checks had a fraudulent signature, they needed to be returned by them by the midnight deadline. She stated that she understood that but that her bank calls other banks like us to see if the customer has the funds to cover the debit and if we do she submits them as collection items. This is where my confusion began. From what I have learned these are not collection items and it doesn't matter if our customer has the funds (which they didn't). This is what I told her. I told her if we received them in the mail we would refuse them. Am I wrong?

Can someone please enlightened me.

Thanks

Carolyn

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#115447 - 09/18/03 01:06 PM Re: late return and collection item
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
I don't think that you are confused at all. I would refuse them as collection items also.
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#115448 - 09/18/03 08:21 PM Re: late return and collection item
RFitzpatrick Offline
Gold Star
RFitzpatrick
Joined: Apr 2002
Posts: 424
Pacific NW
I think that if they can get you to agree to accept them, they could send as a collection item rather than just returning through clearings. I would be rather suspicious of your customer who, based on the information, is depositing fraudulent checks into their account, or at the least a victim of some type of fraud if they accepted the check in good faith.
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#115449 - 09/18/03 08:26 PM Re: late return and collection item
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
This doesn't change the fact the drawee bank is attempting to recover some of its exposure by trying to get your bank to share in this mess. You have no obligation to do so. Refuse the collection letter.
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#115450 - 09/18/03 08:51 PM Re: late return and collection item
Anonymous
Unregistered

Sounds like an SAR may need to be filed detailing this alledged fraudulent activity.

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#115451 - 09/19/03 03:25 AM Re: late return and collection item
JacF Offline

Power Poster
Joined: Nov 2001
Posts: 6,719
PA
Often, banks will do this when dealing with forged maker's signatures because most of the time the depositor is the forger. Like others have mentioned, you have no obligation to accept the returns, and I certainly wouldn't do so in this case- after all, the money's gone, so you have nobody to collect from. But put yourself in the paying bank's position- they have a loss, and they are looking to recover funds from a presumed responsible party (your customer) to the forgery. They could take the low road and try to sneak a late return into the Fed items and hope you don't notice. Or they could take the honest approach, and ask real nice-like for your assistance. They chose the latter, you declined to shoulder their burden, and they are no worse off than they were before they called you.

And I'll echo the thoughts of the other posts here about your customer- it sounds like you've got an investigation on your hands. And if your customer is knowingly passing forgeries, then you're best off getting him out your door as quickly as possible. But before you close the account outright, you may want to consider placing exception holds on any recent check deposits, especially if they follow the same pattern as this check.

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