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#11888 - 12/12/00 04:43 PM Check cashing agreements
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,697
Cape Cod
Anyone out there have written agreements in place to cash payroll checks for employees of businesses that either do not keep their payroll accounts with you or don't bank with you at all? In these cases, the employee doesn't bank with you, either.

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John Burnett
Cape Cod Bank and Trust

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Security - PUBLIC
#11889 - 12/12/00 06:06 PM Re: Check cashing agreements
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
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I guess I'm missing something here, but if the company doesn't bank with you at all, and the employee doesn't bank with you either, why would you cash the check?

Most banks do not cash checks for non-customers unless the check is drawn on the bank.

As for non-customers cashing payroll checks drawn on the bank, that is part of what you accept when you service a payroll account. If you refuse to cash payroll checks drawn on your bank, your customer may very well take their business elsewhere. I am, however, not aware of any special agreements other than what is in the standard account agreement.

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#11890 - 12/12/00 08:58 PM Re: Check cashing agreements
Dana Turner Offline

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Dana Turner
Joined: Dec 2000
Posts: 543
Pipe Creek TX - U.S.
John:

Ask your bank's legal counsel to create a "hold harmless" agreement that limits the bank's liability. This type of an agreement makes the customer liable for the loss in case of fraud or forgery.

For new customers, you might also re-design your signature card and the account agreement to reflect this language.

Keeping in mind all other regulations governing this type of account -- you should notify existing account holders of this practice and give them the opportunity to contact the bank.

Instituting "Positive Pay" services and thumbprinting requirements for this type of presenter are also popular practices.

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Dana Turner
Security Education Systems
danaturner@bankersonline.com
210-310-0212

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#11891 - 12/12/00 09:40 PM Re: Check cashing agreements
Anonymous
Unregistered

When I worked for Fleet Bank (NJ) as a risk officer, they had a branch in northern NJ who had the legal department drawn up and agreement which allowed a former large customer to cash their payroll checks that were not drawn on Fleet Bank with a $5 per check service charge! This company had their operating account for many years with the bank and then their headquarters did a consolidation of accounts with an out of state bank. Overall the bank did not want this type of arrangement but accomodated this company. Some of their employees did have accounts with Fleet.

In the agreement they also had the company keep an account with a balance great enough to cover return items. The fee income for this branch increased considerably and they did not have that many problems with return items. I hope this helps.

OPINIONS STATED ARE NOT NECESSARILY THAT OF MY EMPLOYER.


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#11892 - 06/01/01 07:21 PM Re: Check cashing agreements
P*Q Offline

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P*Q
Joined: May 2001
Posts: 8,458
Somewhere
We have a couple of businesses that we cash check for their employees who are non-customers. Why you ask? I was told..."it's the way we've always done it" So, sorry I can't offer you further advice. It's the way it is!

[This message has been edited by Pam LeBlanc (edited 06-01-2001).]


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#11893 - 01/28/02 06:16 PM Re: Check cashing agreements
Anonymous
Unregistered

I find it odd that banks can refuse to honor a check drawn on their bank for presentment in person. If I issue a check to someone the person should be able to cash the check with proper identification. TCF bank in Illinois changed it's check cashing rules this past week and no longer cashes checks drawn on it's bank unless the payee also has an account at TCF.

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#11894 - 01/28/02 07:24 PM Re: Check cashing agreements
Comply 101 Offline
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Comply 101
Joined: Jul 2001
Posts: 708
K11m17s,

What if you hadn't issued a check to someone, yet they showed up at your bank with a fraudulent check and proper id drawn on your account? This is happening now. Computer generated checks look identical to a real check. A local "thief" was caught doing this to our bank recently. How did we catch him? We called our customer to verify that they issued the check to him. Since they didn't, the person was arrested.

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#11895 - 01/28/02 07:54 PM Re: Check cashing agreements
Barbara Hurst Offline
Member
Barbara Hurst
Joined: Dec 2000
Posts: 61
A bank can decide whether or not to cash checks for non-depositors, but runs the risk on payroll accounts of constantly having to do so. Dana is correct that positive pay is almost the best way to go, but for thousands of businesses, who have only a few employees, it really is not feasible to do so.
If I write a check on my bank and give it to my employee, who takes it to my bank to cash, but is not a depositor there, the bank can refuse to cash it UNLESS THE EMPLOYEE IS PROPERLY IDENTIFIED. Therein lies the rub. What is the real meaning of "properly identified"? It means properly identified by my bank, in this case. If the bank is not satisfied, it can refuse to pay the check.
My agreement with the bank says that when a check is presented that is properly payable, they must honor it. If all else is in order, date, signature, etc., that "properly identified" takes on the balance of the properly payable requirement. If the person IS properly identified according to my bank's definition, and they STILL refuse to pay it, they can be liable to a law suit from me ... but not from the payee on the check.
It is not uncommon for payroll checks to be fraudulently copied and presented for payment. I'm sure some banks feel that by charging for the encashment of payroll checks, they can help recover some of the losses they suffer through improper payment. But then the bank has turned into a check-casher.
This is not a problem that is going to go away. Sometimes a targeted effort on the parts of new accounts people can turn some of those payroll customers in depositors. That helps the most.

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#11896 - 05/23/02 04:14 PM Re: Check cashing agreements
VMack Offline
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Joined: Jun 2001
Posts: 837
Texas
John,
I was researching check cashing agreements and found your question regarding written agreements for the purpose of cashing payroll checks. Did you find a sample agreement or any other information that you can share with me? Thanks so much for your response.
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#11897 - 01/13/03 04:39 PM Re: Check cashing agreements
Anonymous
Unregistered

Positive Pay will certainly help with this issue as it is designed to catch fraudulent checks before they are cashed. Prelude Software has a great solution for banks looking to install positive pay at the bank and at bank customer sites. Their website: www.psipay.com & phone: 800 996 6427

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#11898 - 07/23/03 04:32 PM Re: Check cashing agreements
Anonymous
Unregistered

Quote:

I guess I'm missing something here, but if the company doesn't bank with you at all, and the employee doesn't bank with you either, why would you cash the check?<P>Most banks do not cash checks for non-customers unless the check is drawn on the bank.<P>As for non-customers cashing payroll checks drawn on the bank, that is part of what you accept when you service a payroll account. If you refuse to cash payroll checks drawn on your bank, your customer may very well take their business elsewhere. I am, however, not aware of any special agreements other than what is in the standard account agreement.




This is not true, First Union does this, but they ask for 2 forms of ID. Doesnt matter what bank the check is drawn from.

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