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#1056304 - 10/02/08 02:25 PM Stop Payment on Cashier's Check
complyyes Offline
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Joined: Apr 2006
Posts: 51
Midwest
We have a customer that deposited a non-local check for $4800. We placed a hold for 5 days. The paying bank notifies us that it is being returned. Our deposit ops center does not receive the check back until after the hold fell off. The customer came into the bank at opening on the day the hold was released the night before. She has us issue a cashier's check for $4200 and two money orders for $500 each. The customer mails the cashier's check to whomever is scamming her. The check comes back that evening. #1 CAN we STOP pay this cashier's check because it was issued against a counterfeit check? #2 Can our deposit ops upon learning a check is being returned unpaid extend the hold by 6 days (non-local exception hold total 11 days)and send notice to the customer that the hold has been extended because we were told the check is being returned not paid? I would like to know if any other banks are issuing stop pays on cashiers checks in these circumstances.

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#1056341 - 10/02/08 02:43 PM Re: Stop Payment on Cashier's Check complyyes
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
#1 CAN we STOP pay this cashier's check because it was issued against a counterfeit check?

Call you attorney. Normally the answer is no - but you might want to see who and how this check is eventually presented for payment.

#2 Can our deposit ops upon learning a check is being returned unpaid extend the hold by 6 days (non-local exception hold total 11 days)and send notice to the customer that the hold has been extended because we were told the check is being returned not paid?

Just process the return - why extend the hold?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1056453 - 10/02/08 03:36 PM Re: Stop Payment on Cashier's Check rlcarey
kendrar Offline
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Joined: Jan 2008
Posts: 279
Can you process a return upon notification even though you have not received the item?

It seems like it takes an unusually long time for some of the returns to reach us again. Sometimes 5 business days, 7 calendar days. This is a scary situation for a bank. Does anyone know why the Fed is returning checks via the mail instead of electronically? It seems backward to do everything else electronically but do one of the things that can hurt the bank through snail mail.....

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#1056476 - 10/02/08 03:51 PM Re: Stop Payment on Cashier's Check kendrar
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Can you process a return upon notification even though you have not received the item?

Sure.

In fact you have an obligation to inform your customer of the notification of return. What better way than to just process the return and send the normal notification???

229.33(d) Notification to customer. If the depositary bank receives a returned check or notice of nonpayment, it shall send or give notice to its customer of the facts by midnight of the banking day following the banking day on which it received the returned check or notice, or within a longer reasonable time.

This requirement is similar to the requirement under the U.C.C. as interpreted in Appliance Buyers Credit Corp. v. Prospect National Bank, 708 F.2d 290 (7th Cir. 1983), that a depositary bank may be liable for damages incurred by its customer for its failure to give its customer timely advice that it has received a notice of nonpayment.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1056598 - 10/02/08 04:56 PM Re: Stop Payment on Cashier's Check rlcarey
Anonymous
Unregistered

And if you are notified that a check is being returned, you can (and should) immediately place an extended hold on the account for the amount of the return until you receive and process the return. Reg CC only applies to deposited items, not return items.

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