So after searching throughout these forums, I was not able to get an actual answer on what the true reasons a bank can use: "Reasonable Cause To Doubt Collectibility" as an exception hold.

What are some examples that a financial institution could use this reason when placing holds on local checks?

For instance, if an account is inactive for 5+ months (let's say less than $50 in account) and all the sudden a $2k check is deposited. Could I hold based on reason to doubt collectibility?

Thanks!

No. The lack of activity in your depositor's account does not convey any information to you about the account the deposited item is drawn on.

Regulation CC's Model Form C-13 contains a list of circumstances that would, as a matter of law, give reasonable cause to doubt collectability of a check. There are others.

Apparently, your customer's lack of account activity concerns you. That has absolutely no logical connection to whether or not the check he or she wants to deposit is any good.

I agree that the reasons you describe don't appear to meet the "Reasonable Cause" requirement to delay availability. Ken mentioned the list of circumstances in Model Form C-13 and correctly says "there are others." Here's what the commentary to §229.13(e)(1) states (in part):

The model notice includes several reasons for which this exception may be invoked. The Board does not intend to provide a comprehensive list of reasons for which this exception may be invoked; another reason that does not appear on the model notice may be used as the basis for extending a hold, if the reason satisfies the conditions for invoking this exception.

I'm bringing this up as I frequently have to explain that you can have other reasons not listed on the Model Form. Just make sure it makes logical sense and you document why you delayed the funds.

We have noticed a trend where if an account is inactive for 5+ months and they never made deposits (for example) $2k and then all the sudden deposit that amount. Majority of the time, the checks return unpaid, which we take a loss on unless we are able to place an exception hold on the check to give it enough time to return before we release the funds; however, I do appreciate your response, I will definitely look into that.

Could you send some of these items for collection?

Not that I am aware of.

@CUFraud12. In the situation you describe above, the branch would make every effort to verify the item with the bank it is drawn on prior to deposit. Not all banks will do this, but it is definitely worth the effort to determine if you may be dealing with a counterfeit item or possible scam before the item is even deposited. Many times we will call the company that issued the check. If it is not a next day item, place the case-by-case hold if you need time to verify the item. They will have access to the $200 but not the whole $2,000.