We had a customer obtain a bank cashier's check to pay a credit card bill. Instead of the company sending thru the original check for payment, they sent thru a paper draft stating "pre-authorized payment". Balancing dept. fears that they will try to send thru original check also and wants to put stop payment on anytime a check is made payable to this credit card company. Am I correct when I say that it doesn't matter if it is a bank cashier's check account or any other account that if the original check was converted in any form that it has already notified the customer (usually in fine print) that this is acceptable and that if they send thru the original check also, the bank will return it in the correct time frame allowed? I feel they may be thinking too much and being overly cautious and there is no reason to start putting stop payments on these. Also they wanted to know if we could refuse these "replacement drafts", especially if they don't put the authorized signers name on it.

I don't understand. They converted your cashier's check to a paper "pre-authorized draft"?

You have the absolute right to reject the paper "pre-authorized draft." Here's what I think happens -- The payee of the check routinely converts checks it gets to ACH ECK formats -- ARC entries. When it realizes that a cashier's check isn't an acceptable source document, and can't lay its hands easily on the original cashier's check, it creates this spurious remotely created check.

If you are able to catch these items in time for a timely (midnight deadline) return, you can do it. They are not cashier's checks even if the payment "instructions" are derived from a cashier's check. Be aware of the consequence of the return, though -- the remitter of the cashier's check might have his/her payment to the payee reversed, making it late, etc.

Yes, they did

That's what we were thinking too. Thank you