Stop Payment on a Money Order?
by Barbara Hurst
QUESTION: Can we place a stop payment on a Money Order? I said as long as the customer signs an affidavit, the bank should be covered. Am I right?
ANSWER: There are two distinct types of money orders: bank money orders and personal money orders. Personal money orders are money orders that bear the customer's signature. A personal money order is the equivalent of a one-shot checking account and a bank can allow a
customer to place a stop payment on it.
The other kind is the bank money order. A bank money order is signed by the
bank and is therefore a direct bank obligation. If the money order is signed by
the bank and drawn on the bank, it is the legal equivalent of a cashier's
check. If it's signed by the bank, but drawn on an account maintained by the
bank at another institution,, it is the legal equivalent of a teller's check. A
bank should generally NOT put stop payments on these items.
If you do issue personal money orders, it's always a good idea to have the money order filled out at the time of purchase, if possible, so that you have enough information for the stop.
First published on BankersOnline.com 3/5/01. Edited 3/8/01.