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Bank's Right to Refuse Deposit of Fraudulent Item
Answer by Ken Golliher, BOL Guru
Guru Bios

Question:  It is my understanding that a bank has the right to refuse a deposit at any time, however, I can't find the specific law or regulation to cite when discussing this issue. I need to be able to show we can refuse a deposit in order to avoid accepting checks that are clearly fraudulent such as the "Australian Lottery". I know Reg CC somewhat mentions the banks ability to reject a check 229.19 (C)(2)(i). Is that the Reg I should use to justify refusing to accept clearly fraudulent deposits?

Answer:  The section you cite might readily convince a layman that you may refuse to accept a check for deposit. However, the piece of legal architecture that is truly missing is any suggestion under the law that you must accept an item offered for deposit. You don't need to offer any justification for a refusal to accept an item for deposit. The phrase from Reg CC did nothing more than acknowledge the right, it certainly did not create it.

First published on 11/27/06

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