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#704732 - 03/21/07 10:43 PM Joint Payee Tax Refund Checks - ATM deposits
CU_Shannon Offline
New Poster
Joined: Mar 2007
Posts: 2
SF Bay Area, CA
Our member deposited a US Treasury tax refund check made payable to herself and to another payee not on the account. Our insititution has no record of that other payee, no way to verify signature, etc.

The member is the sole owner of the account.

Had she does this at the branch, the deposit would have been declined because we do not allow third-pary checks. Payees without an account here are considered third-party.

But she did this at an ATM belonging to another FI.

Clearly the check will not bounce. But we are concerned about our liability nonetheless. What if she intercepted this check - say, from an estranged spouse - and endorsed it herself?

I should add that this member has enough of a history of trying to negotiate third-party checks that her account has been noted multiple times, to include a flashing-screen notice(!).

I think the liability is on the member, not us. Heck, we would not even have known if not for the Large Deposit Notification. However, I am not willing to be wrong for a $6K+ check without at least checking with people first.

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#704803 - 03/22/07 10:36 AM Re: Joint Payee Tax Refund Checks - ATM deposits CU_Shannon
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
If you get a reclamation notice based on a claim that the second payee did not receive his or her portion of the funds, the initial risk of loss is yours. You will have no defense to the claim and you will pay it. Then, you will seek reimbursement from your member.

Your member already knew that if she deposited this item in person it would be turned away, but she has figured out that does not happen if she uses a foreign ATM. She will do it again.

Realizing that your connection to your clientele goes beyond simple contract terms, I suggest that any time your institution has had more than one opportuntity to classify a member as a threat you should terminate the relationship or be prepared to accept the consequences as you may have to do here.
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#706337 - 03/23/07 11:47 PM Re: Joint Payee Tax Refund Checks - ATM deposits Elwood P. Dowd
CU_Shannon Offline
New Poster
Joined: Mar 2007
Posts: 2
SF Bay Area, CA
Thank you very much for your reply. After taking it into consideration,we are strongly considering cutting our ties to this member.

Again, thanks for taking the time to help - much appreciated.

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#707175 - 03/27/07 03:51 PM Re: Joint Payee Tax Refund Checks - ATM deposits CU_Shannon
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
If you are stuck with a requirement that your board must vote to terminate the membership (a new one on me, but I heard about the possibility today), you might take an interim step of disconnecting the member's ability to make deposits at foreign ATMs by terminating her card access privileges.
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