We've recently had discussions on when this exception hold reason can apply. My take is that it is used when you have reasonable cause to doubt the item being deposited is a good item (by info from the paying bank) and this reason is not to be used when you are doubting your customer's financial situation (unless you have evidence of kiting). In other words, just because it is rumored that John Doe is filing bankruptcy has nothing at all to do with the check he is depositing from Sam Jones. Since we have no adverse info on Sam Jones check then we cannot use the reasonable cause reason. Another scenario: John has a check for $1500 to deposit but since his average balance is only $75 we are concerned he can't make the check good should it have reason to come back. Since we know of no problem with the $1500 check we cannot place the reasonable cause hold just because we doubt John can make it good. Any thoughts?

Several threads have discussed this over the years...this is one of my favorites. Take particular note of what Skittles and Doug Hendrickson say.

https://www.bankersonline.com/forum/ubbt...ity#Post1922123

The only "status" a customer might have that would allow an exception hold other than being a new customer is "repeated overdrafter."

For "reasonable cause to doubt collectability," your problem must be with the check, not the customer who is depositing it.

...and if your problem is with the customer, some may ask why it isn't a problem with an ex-customer.

To piggy back on this, is there any legitimate hold reason that could be used on Credit Card Checks? I've heard from other banks that they do not accept them for deposit, but our officers would like to accept them if they could place a hold on the funds. I've told them that they could send them for collection, but no one (employees or customers) likes doing that anymore. Thanks in advance!

That would be considered a "class of check". At one time those checks were of significant risk, as they were treated as drafts and could be returned at most anytime. Now, they are just checks that have to meet the midnight return deadline.

(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.

It's seriously depressing that a question that was answered firmly in 1988 continues to surface. Whoever trained your officers should be selling tomatoes along side a country road.