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#1500969 - 01/26/11 11:44 PM Charging fees for cashing non-customer checks
isaidno Offline
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Joined: Feb 2007
Posts: 126
I've seen this question a few times with links to the IL Banking Laws and I've read an article from 1996. Nothing is specific about whether you can charge a non-customer for cashing an on-us check. The question keeps coming up and I would like to know what others are doing and if anyone can state specific law or regulation that allows the charge. If you charge, do you disclose in your account disclosures?

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#1501986 - 01/28/11 05:44 PM Re: Charging fees for cashing non-customer checks isaidno
xerx Offline
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xerx
Joined: Jul 2010
Posts: 226
I researched this about a year ago.

I don't know of any Illinois state laws that prohibit charging non-customers for cashing on-us checks. And I think this is fairly common. I WOULD disclose it in your account agreement. I also know that some banks limit which branches non-customers can cash the check at (by arguing that cashing it at other branch is not a proper presentment). This seems somewhat aggressive, but it seems to work.

I removed the bank's name, but below is a disclosure that some other bank uses.
===============
[bank] may, in its discretion, limit the locations at which it
will cash checks written on your Account payable to
non-[bank] account holders. We may change these
designated offices from time to time. The locations of
such designated offices are available at your local [bank]
branch. (A request that [bank] cash the check at any other
location is not a proper presentment of the check.)
Payees may deposit the checks that you give them into
their own account(s) in order to receive payment. [bank]
may charge [bank] account holders a fee to cash these
checks.

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#1527567 - 03/28/11 03:19 PM Re: Charging fees for cashing non-customer checks xerx
xerx Offline
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xerx
Joined: Jul 2010
Posts: 226
Just found this:

"In sum, the OCC's interpretation that “customer” includes payees who present a check to a drawee bank for payment due is controlling.   Consequently, the national banks are authorized by federal regulation 12 C.F.R. § 7.4002(a) to charge non-account holding payees a check-cashing fee. "
http://caselaw.findlaw.com/us-5th-circuit/1361617.html

Take note: this is a fifth circuit decision, and Illinois is in the 7th circuit. So, this case isn't legally binding on Illinois transactions. But, it is persuasive.

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#1529149 - 03/30/11 09:32 PM Re: Charging fees for cashing non-customer checks xerx
kw004h Offline
100 Club
Joined: Nov 2009
Posts: 219
Chicagoland, IL
http://www.ilga.gov/legislation/BillStat...amp;LegID=59182

This legislation is currently sitting on the table of the House Rules Committee. It was introduced a month ago,so who knows if it will go anywhere....

Synopsis As Introduced
Amends the Illinois Banking Act. Provides that no financial institution shall require a person that does not have an account with the financial institution to pay any charge, fee, penalty, or other amount for the cashing of a check drawn on an account held at the financial institution.

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#1529168 - 03/30/11 09:55 PM Re: Charging fees for cashing non-customer checks kw004h
isaidno Offline
100 Club
Joined: Feb 2007
Posts: 126
Thanks for the information. I'll be happy to have a ruling and finally be able to say yes or no without the "big bank" argument that follows.

Do you know if we're able to sign up for email alerts for the IL.gov site? I don't see anything, but it's not the easiest site to navigate.

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#1529237 - 03/31/11 01:32 AM Re: Charging fees for cashing non-customer checks kw004h
xerx Offline
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xerx
Joined: Jul 2010
Posts: 226
That's really interesting.

But, the legislation will create more uncertainty than clarity, until a 7th-circuit court rules on whether this matter it's preempted by federal regulation. That's what happened in the case I posted about above. (I guess this is only an issue for federally regulated banks--especially, the OCC.)
Last edited by xerx; 03/31/11 01:50 AM.
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#1529353 - 03/31/11 01:57 PM Re: Charging fees for cashing non-customer checks isaidno
MyBrainHurts Offline
Platinum Poster
Joined: Feb 2010
Posts: 960
Illinois
Originally Posted By: isaidno
Thanks for the information. I'll be happy to have a ruling and finally be able to say yes or no without the "big bank" argument that follows.

Do you know if we're able to sign up for email alerts for the IL.gov site? I don't see anything, but it's not the easiest site to navigate.


I don't think you can get alerts from the gov site, but you can get the email newsletter "Week in Review" from the IBA. It will keep you up to date on pending state bills.
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