On our exception hold form, management has added the following to the "other" box:

"Out of state check/business system identified check as possible fraud."

So basically any time our software pops up the warning message, we are automatically putting a hold on those checks.

Thoughts? Thanks.

What do those two thing have in common? What business system??

I think a comma is missing between business and system, should read:

"Out of state check/business, system identified check as possible fraud"

my question would be is every out of state check flagged and treated as this? or is it really doing some filtering to determine if possibly fraudulent? and if the 2nd, what type of filtering is undertaken?

The length of the automatic hold on "out of state" checks?

Caution, your answer will determine whether your bank is laying claim to a UDAP violation. Hint; if you make the funds available on a second day basis your management looks ridiculous, but probably won't make the front page.

This is something new that management just implemented. A sample form just "landed" on my desk from an employee. I'm not sure that we've actually given any holds out yet using this new "box."

I'm assuming they will utilize the "reasonable cause" reason...nothing available until the 7th business day. I guess I need to inquire further.

Thanks for your thoughts.

If they are focusing on out-of-state checks or business checks, keep this in mind when you are doing further research:

(e) Reasonable cause to doubt collectibility--

(1) In general. Sections 229.10(c) and 229.12 do not apply to a check deposited in an account at a depositary bank if the depositary bank has reasonable cause to believe that the check is uncollectible from the paying bank. 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. Such belief shall not be based on the fact that the check is of a particular class or is deposited by a particular class of persons. 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.

Translated: You cannot put on an exception hold just because it's an out of state check. It has to be a blue out of state check.