Refer to Maker

Question: In the compliance area of BankersOnline I read an article titled "Refer to Maker Revisited."

I have been researching the term "refer to maker" and cannot find why banks use that term. Are there any regulations, perhaps clearing house rules or banks own internal regulations, that specifically mention that "refer to maker" should be stamped on a check? Neither Regulation CC nor the UCC mention the term. The article also states that when a check is stamped "refer to maker" it is 99% sure to be a fraud. Besides stamping the check with a mark noting they are not paying the check, is a bank obligated to do anything if they suspect a fraud?

Answer: The stamp "Refer to Maker" has been around much longer than you and I have been in banking! It's a catch-all reason for return. Unfortunately, many financial institutions still use it. I used to use it myself way back when. For instance, if we discovered a kite, and had an opportunity to bounce out some checks in anticipation of some coming back, I couldn't very well mark them NSF - they really weren't at that moment, although we knew they would be. According to our disclosure, they weren't uncollected. The next time they came in they were sure to be no good - and I knew it. So to take the easy way out, we'd stamp them "Refer To Maker." Then along came Reg CC and changed some of the rules. But many Return Item Departments still have the old stamps.

Unfortunately, many police jurisdictions will not prosecute on a Refer to Maker reason. I wish banks would throw away their old stamps! But as long as there are checks to return that don't "fit" the other reasons, I'm afraid Return Items Departments will continue to use them.

As for the bank being obligated to do anything if a fraud is suspected, other than the filing of a Suspicious Activity Report, depending on the circumstances and/or the amounts, there is none.

Copyright © 2005 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 11, 1/05