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#152875 - 01/23/04 01:45 PM Reg CC - Other Exception Reasons
Georgia Golfer Offline
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On the delayed availability form, what are some acceptable 'other' reasons? Any examples of not acceptable reasons? Thanks

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Operations Compliance
#152876 - 01/23/04 02:20 PM Re: Reg CC - Other Exception Reasons
Skittles Online
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Bad Examples: Out of State Check; Credit Card Check

Good Examples (I think): Alterations on Check; Suspect Kiting (although we use 'We have Confidential Information that indicates the check may not be paid';
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#152877 - 01/23/04 02:31 PM Re: Reg CC - Other Exception Reasons
Georgia Golfer Offline
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What about a statement that there is not enough in the acct to cover the check if it's NSF. I don't like it and I don't want them using it, but can't find any official language to that affect.

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#152878 - 01/23/04 02:32 PM Re: Reg CC - Other Exception Reasons
rlcarey Online
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Actually, I have found few acceptable "other" reasons. Most "other" reasons invoked by branch personnel do not turn out to be valid and just result in violations. I have gone so far as to removed the other line from the hold forms for that reason.
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#152879 - 01/23/04 02:33 PM Re: Reg CC - Other Exception Reasons
Skittles Online
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That's not listed as an exception reason and wouldn't fly with the examiners. You are only allowed to use what the regulation states for exception holds. If it doesn't fall into one of those categories, then you can use a case by case hold if you institution does those.
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#152880 - 01/23/04 02:50 PM Re: Reg CC - Other Exception Reasons
Georgia Golfer Offline
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It sounds like the 'other' line serves no purpose since there are 13 other reasons to use. I think I'm going to follow in your footsteps and eliminate that line. The easier the better.

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#152881 - 01/23/04 02:53 PM Re: Reg CC - Other Exception Reasons
Skittles Online
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The only thing we use that line for is 'new' account. We reserve the right to hold checks during the initial 30 day period, but only use it periodically and not across the board.
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#152882 - 01/23/04 03:00 PM Re: Reg CC - Other Exception Reasons
rlcarey Online
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Skittles - and technically, you are not even required to provide a notice for a new account hold.
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#152883 - 01/23/04 03:11 PM Re: Reg CC - Other Exception Reasons
Inquisitor / Sommelier Omega Offline
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I have used "reason to doubt collectability" as an other. It could be some banks have this as a printed option. It sounds a whole lot more professional than "we think this jerk is kiting".
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#152884 - 01/23/04 03:27 PM Re: Reg CC - Other Exception Reasons
Georgia Golfer Offline
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The form that we have been using for years contains 13 reasons besides the "other". I'm going to 86 letter N and be done with it. Thanks for all the help.

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#152885 - 01/23/04 03:57 PM Re: Reg CC - Other Exception Reasons
Inquisitor / Sommelier Omega Offline
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Quote:

The form that we have been using for years contains 13 reasons besides the "other".




Sundawg,
Is one of those reasons doubt of collectability or something to that effect? I can apreciate that you would rather not have an "other" box. Why allow the oportuntiy to put a non-compliant reason in writting?
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#152886 - 01/23/04 04:13 PM Re: Reg CC - Other Exception Reasons
Georgia Golfer Offline
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Omega, it does and that's why I can't imagine needing the 'other' box. I'll introduce the new and improved form at my Reg CC training classes in the beginning of Feb.

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#152887 - 01/23/04 04:17 PM Re: Reg CC - Other Exception Reasons
GreatBlue Offline
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Omega,
"Reasonable cause to doubt collectibility" is one of the standard exception reasons under 229.13, but if you use it, you are required to indicate the underlying reason.

"The reason for the bank's belief that the check is uncollectible shall be included in the notice required under paragraph (g) of this section."

So, "reasonable cause to doubt collectibility" alone is not enough. Model C-13 gives the following possible reasons for a "reasonable cause" hold:

--We received notice that the check is being returned unpaid.
--We have confidential information that indicates that the check may not be paid.
--The check is drawn on an account with repeated overdrafts.
--We are unable to verify the endorsement of a joint payee.
--Some information on the check is not consistent with other information on the check.
--There are erasures or other apparent alterations on the check.
--The routing number of the paying bank is not a current routing number.
--The check is postdated or has a stale date.
--Information from the paying bank indicates that the check may not be paid.
--We have been notified that the check has been lost or damaged in collection.
--Other:
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#152888 - 01/23/04 04:25 PM Re: Reg CC - Other Exception Reasons
Georgia Golfer Offline
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Right now, my form contains the following:
A. An emergency, such as failure of communications or computer equipment.
B. Your account is a new account, open less than 30 days, and your have had no other checking accounts with us in the last 30 days.
C. The checks you deposited on today's business have exceeded $5,000
D. You have repeatedly overdrawn your account in the past six months
E. A check you have deposited was previously unpaid
F. We have confidential information that indicates that a check you have deposited might not be paid
G. We are unable to verify the endorsement of a joint payee
H. Some information on a check you have deposited is not consistent with other information on the check
I. There are erasures or other apparent alterations on a check you have deposited
J. A check you have deposited is postdated or has a stale date
K. Information from the paying bank indicates that a check you have deposited may not be paid.
L. We received notice that a check you have deposited is being returned unpaid
M. We have been notified that a check you have deposited has been lost or damaged in collection
N. Other

We list the policy at the top and an explanation of New Account at the bottom. Is 'other' really necessary?

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#152889 - 01/23/04 05:16 PM Re: Reg CC - Other Exception Reasons
Elwood P. Dowd Offline
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I love it that Sundawg is applying a common sense evaluation to a model form. I am doubly impressed that someone before him has clearly deleted a couple of the "acceptable" reasons. In my opinion, C-13 is one of the worst model forms out there for leading contact personnel into lousy decisions:

*Like rlcarey, I have never seen an acceptable reason under "other" except when banks use the form for holds on savings accounts and just write in "savings account" as the reason for what would otherwise appear to be an illegal hold. Most reasons written on the line next to "other" are clear violations.

*Large dollar deposit hold on a cashiers check because the bank is concerned about the check's authenticity. O.K., you just agreed to lose $5,000 if you happen to be right about the cashiers check. (The exception hold is the wrong risk management tool for a large cashiers check of questionable lineage.)

*Unable to verify endorsement of a joint payee - The drawee bank can kick a check back for forged endorsement for up to three years after payment. What good is an eleven day hold?

*Erasures or apparent alterations - The drawee bank can kick a check back as "altered" up to one year after payment. What good is an eleven day hold?

*The routing number is not a current routing number? Then why is the bank sending the check through the clearing system?

*The check is drawn on an account with repeated overdrafts? How would a depositary bank know this unless it's an "on-us" check? (The fact that several identical checks have been returned NSF does not indicate the drawer's account is frequently overdrawn, it may indicate exactly the opposite - the drawee bank has no intention of ever allowing this customer to be overdrawn.)

Gosh I feel better! Please poke any holes you care to in my thought processes, but, either way, it's a lousy form.
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#152890 - 01/23/04 05:42 PM Re: Reg CC - Other Exception Reasons
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I only have one hole to poke, Ken:
Quote:

*The check is drawn on an account with repeated overdrafts? How would a depositary bank know this unless it's an "on-us" check? (The fact that several identical checks have been returned NSF does not indicate the drawer's account is frequently overdrawn, it may indicate exactly the opposite - the drawee bank has no intention of ever allowing this customer to be overdrawn.)


As Reg CC defines 'repeated overdrafts' as six occurrences in the past six months, and goes on to include items that would have overdrawn the account had those items been paid, I think this reason is just fine. So if I have received at least six returned checks (NSF) drawn on the same account over the past six months, then I would use this reason. In fact, we've had several instances where we have delayed availability for exactly this reason, with positive tangible results, and no violation cited by our examiners.

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#152891 - 01/23/04 06:49 PM Re: Reg CC - Other Exception Reasons
Inquisitor / Sommelier Omega Offline
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We have had little reason to do holds. In my recent kite example, the "customer" was in an office talking to an officer about how kiting is illeagal. Although I don't have it in writing-she understood our concern when I handed the hold to her.
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#152892 - 01/23/04 06:56 PM Re: Reg CC - Other Exception Reasons
Georgia Golfer Offline
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Why not lose the 'other' line and substitute for 'non-transaction account' or 'savings account'. It seems that's the only reason people use Other anyway. That would seemingly eliminate the "No Recourse" label that one teller has decided is OK. Don't ask, I don't know where she got that. That's one of the reasons I'm doing CC training next month.

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#152893 - 01/24/04 08:28 PM Re: Reg CC - Other Exception Reasons
Elwood P. Dowd Offline
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Sundawg, I agree, changing "other" to the only legitimate reason you think could possibly be used makes sense.

JacFSB, I agree with you too. There would be absolutely no legal problem using the "6 or more overdrafts" reason; if your contact personnel think the way the reg thinks they will not be misled. My point is only the obvious: 6 NSF checks is not the same as 6 overdrafts and a person who thinks literally is going to say, "How would I know if a person who banks somewhere else is frequently overdrawn?"
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#152894 - 02/09/04 08:41 PM Re: Reg CC - Other Exception Reasons
Anonymous
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Are you sure that reason (L) is a valid reason for placing a hold for uncollected funds?? We have been advised by our attorneys that unless you place a hold at the time of accepting the deposit, you have missed your opportunity to place a Reg CC hold. Once notification has been received of a deposited item being returned, the only course of action is to charge back the item. ??

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#152895 - 02/09/04 09:03 PM Re: Reg CC - Other Exception Reasons
John Burnett Offline
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Reason (L) on the form in question is a subset of "reasonable cause to doubt collectibility." It merely states the reaonable cause. It's perfectly acceptable to place a hold after the fact if you only become aware of the problem after the customer has left the bank.

I happen to be in the camp that would debit the account, rather than place a hold.
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#152896 - 02/09/04 09:46 PM Re: Reg CC - Other Exception Reasons
Georgia Golfer Offline
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Commercial Customer files bankruptcy, no NSF's & not an "overdrafter" per CC. Can we use an exception hold for reasonable cause because of the bankruptcy alone?

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#152897 - 02/12/04 05:32 AM Re: Reg CC - Other Exception Reasons
Princess Romeo Offline

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Bankruptcy filed by the Depositor? I'm not sure that would throw the collection of a deposited check into doubt.

Bankruptcy filed by the maker of the check? Then I would say you have a very reasonable belief that the check may not be paid.
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