We are experiencing Wells Fargo returning cashier's checks prior to the 90 day period and with a return reason of stop pay. How can they do this and get away with it?

Also when this happens, what is the best way to deal with it? Do we the bank need to initially try to get with Wells Fargo because we see that it is wrong or do we just charge it back to our customer and leave it up to our customer to have to deal with it?

Prior to what 90 day period?

How do they get away with it? By being the 400 pound gorilla in the situation. One can infer that someone at Wells doesn't know the law, or that he or she (or higher-ups in the organization) think they can get away with it simply because it's a big organization with more resources than the average bank. I won't offer my opinion on that question.

You indeed have the choice of charging the check back to your customer, who may or may not know what the UCC says about a bank's refusal to honor its own cashier's checks, or pushing back on the check issuer yourselves (in which case you'll have to either put the amount in suspense pending resolution or try to re-present the check hoping that the issuer will come to its senses the second time around).

I'd start, perhaps, by trying to contact Wells and whatever department is responsible for returning the check. Sometimes, when the law is spelled out, especially when an employee's mistake is involved (rather than the 400-pound gorilla), issuers have been known to reverse course and agree to pay the check in question. If that gets you nowhere, you'll need to decide whether you or your customer will have the pleasure of talking to legal counsel.

Of course, if your customer doesn't have funds to cover the charge-back, your options are fewer.

TX UCC § 3-312(b)
[url=http://law.onecle.com/texas/business/3.312.00.html]

Also found this: [url=http://www.BankersOnline.com/compliance/gurus_cmp120202i.html]

Thanks, John...Ugh!!!

ohh...new development. We got a hold of someone at Wells Fargo and they asked us to send the returned CC for collection. We will see what happens next.

Dun, dun duuunnnn...

The only state that allows stop payments on cashier's checks is New York, and even there it can't be done except when the remitter/purchaser or payee has filed a claim and affidavit that the check was lost, stolen or destroyed as contemplated by UCC 3-312 adopted in all other UCC jurisdictions. New York puts its equivalent of 3-312 into 4-403 and refers to stopping payment on such checks. The same 90-day waiting period applies, though.

That sounds like you spoke with someone who understands that being the 400 pound gorilla doesn't give you the right to refuse payment on such a check, and may be having you use a collection process to ensure the check gets appropriate attention at the bank.

Good luck, and come back here to let us know how you make out, please!

Most definitely will...

Thanks again.

It could be that whoever it was that originally ordered the Cashiers Check went back to Wells and told them that they "Lost" the check and signed the affidavit anyways. I am sure there is more to this story then just having Wells think they can ignore the regs. I did some training at Wells and that was brought up multiple times as they were training their employees that they don't put stop payments on Cashiers Checks unless lost or stolen