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#1768896 - 12/19/12 05:26 PM personal account checks
jdickson Offline
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What does a financial institution do when discovered that a customer has had checks printed looking like a business check with a business name but drawn on their personal account and they haven't any other business accounts. Is it okay to do this?

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#1768914 - 12/19/12 06:03 PM Re: personal account checks jdickson
Al Miller Offline
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#1769771 - 12/21/12 04:17 PM Re: personal account checks jdickson
Elwood P. Dowd Offline
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The only reasons I can think of that a customer might do this are to:
* perpetrate a fraud or
* avoid conversion of paper items to EFTs.

Most of my concern would center around the former and I would tell them to stop it.
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#1769808 - 12/21/12 05:14 PM Re: personal account checks jdickson
Rocky P Online
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JD, what appears to be the issue
The business format checks or the use of the name on the checks?

I've known of several individuals who do not want EFT conversion and have purposely used the business format. (but I do not know if that is against any regulation)

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#1769818 - 12/21/12 05:35 PM Re: personal account checks jdickson
RBanker Offline
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Austin Texas
I don't know about JD, but my problem would be that the 'entity' indicated as the account owner on the checks isn't the account owner. It's misrepresentation - possibly trying to get around the bank's requirements for a business account and identifying that business (issues here with CIP and USA PATRIOT Act, among others....) by coming in and opening the personal account and then ordering checks for their business.....I would have a problem with that too, whether or not there is a reg against it.
Last edited by R Banker; 12/21/12 05:36 PM.
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#1770417 - 12/26/12 07:08 PM Re: personal account checks jdickson
John Burnett Offline
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To clarify -- unless for some reason the customer's bank has a prohibition on it, there's nothing at all wrong with using a business-format (wider) check with the check number encoded to the left of the FRABA number in the MICR field for a personal account, as long as the only reason is to prevent ACH conversion of the check.

As for ordering checks with a business name but drawn on a personal account, many banks don't (knowingly) permit it for a number of reasons. There's the issue of customer avoidance of business account fees; the potential that Regulation E coverage will be obtained for business transactions; the potential that, because CIP is by-passed by the business that an illicit business is being operated through the account; the possibility that your customer is diverting funds meant for a legitimate business to his own use; the possibility that the customer is defrauding persons who believe they are paying for business services; and more.
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#1770539 - 12/26/12 10:49 PM Re: personal account checks John Burnett
Al Miller Offline
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Pleasanton CA USA
A good example of consumers using business size checks are customers who are visually impaired. The checks are also high contrast with lines, etc. in bold. A prohibition on such checks could be an ADA issue.

Al
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#1772925 - 01/05/13 04:57 PM Re: personal account checks jdickson
jdickson Offline
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It really is not the size of the check about which I am concerned - it is the name on the check that is not the name on the account and is titled as a business.

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#1772926 - 01/05/13 05:08 PM Re: personal account checks jdickson
rlcarey Online
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Galveston, TX
You most likely have a customer that doesn't want to pay business checking fees and thought they could pull a fast one. I would send him a letter that indicates that you would be glad to open them a business account but they must cease and desist this practice immediately or you will close the account.
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