Other banks are charging fees or refusing to answer a payee bank's question regarding whether or not a check will clear. To help eliminate potential fraud loss, tellers are now asking if they can put a hold on a check for no other reason than the payor bank will not tell them if the check will clear.

Of course we could put a hold on the check if it meets any of the other definitions, like new account, but I'm thinking the bank not giving you information is not factual evidence that the check will not clear. Any contrary opinions?

Refusal of another bank to verify funds is not a sufficient reason for a hold.

The "reasonable doubt of collectibility" exception hold has to be triggered by information about the check that suggests it won't be paid when presented. Ask your tellers what information about the check do they have when the paying bank won't give you any information?

If none of the other exception hold options is viable, the two safe options are to refuse the check for deposit or to accept it only as a collection item.

As BurntSienna said, that's not an exception reason to place an extended hold on an account. If the item is deposited into a transaction account, you have to have an exception reason to place an extended hold.

I understand both sides of the argument.

As the depositing bank, you want to do all you can to feel comfortable accepting a check. But it's the risk of doing business.
As the drawee's bank, confirming that a check will or won't be paid is only good information for that very moment. Five minutes after your bank deposits the check, the maker can place a stop payment on the item (and you won't find out until the check is returned).

A couple years ago an auditor criticized us for NOT placing exception holds on too many large items. I protested that we didn't have actionable information. She told me that the inability to obtain verification is all the information we need to act.

I use it sparingly because it still doesn't feel right but we just went through our second audit since she told me that and we were not criticized for using it. I'm extremely picky about how we word the "other" line - it must say exactly this, "Issuing bank will not verify funds" because that's the phrase she used in her criticism.

I've written this three times and deleted it twice because I don't want anyone going this route on my say so. If I hit "submit" this time it will be because I think it merits a conversation with your examiner. But if I didn't have it in writing I wouldn't touch it.

Your auditor is out in left field on this one and has led you far astray.

1. Any auditor that criticizes a bank for not placing holds is offering worthless advice unless the bank is suffering losses that are above normal from a peer bank perspective.

2. As discussed above, unable to verify funds is not an exception reason.

Reasonable cause to believe a check is uncollectible requires the existence of facts that would cause a well-grounded belief in the mind of a reasonable person.

So, if the other bank does not verify funds that would cause a reasonable person to believe that every check drawn on that bank is no good? If the girl I wanted to ask for a date in college did not answer the phone, I should assume she would have turned me down?

To me, it's ridiculous that this idea ever gained any traction anywhere.

Ken - I just love your analogies.

Well, she could have had caller ID

Not when you and I went to college...that's why I picked that time frame.

Sure got some smarty pants' in here! For the record, just because your tellers call on a check, verify funds and do not place the hold does NOT mean the check will clear when presented to the paying bank, that a stop payment has not been placed or that the check is not fraudulent in some manner. I would recommend sticking to Reg CC and do away with this nonsense of tracking down the bank's number, trying to get ahold of them and then receiving quasi accurate information. You are holding up your customers and causing make work projects for your tellers. Let your tellers instead spend that time mitigating other areas of fraud and looking for suspicious activity. Like how I slipped that in there Ken?