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#2205182 - 02/06/19 02:39 PM Case by Case Hold - Customer Not Present
Gotwood Offline
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Joined: May 2001
Posts: 715
A customer makes a $500 ATM deposit on Monday at 11:00am. On Tuesday morning when we retrieve the check image (we don't get this until then) we want to place a case-by case hold on it for one day. Since a hold notice was not given (and could not be provided via the ATM obviously) can we send them a notice at that point? ie, we want to hold it until Wednesday.

My reading of the timing notice in 229.13 notes this is for exception hold notices only.

our reasoning is this: the deposit is of the type that we suspect it is fraudulent, but to this point there has not been an issue (not new customer, repeat overdraft, etc.). however, most banks will no longer tell us if a check will clear (we still do). The customer to this point has not had any issues - not new customer, repeat overdraft, etc. We generally find out Tuesday night that the if the check is good.

the challenge is our system will not let us place a hold on the check (case-by-case) for a deposit on Monday because it programs the hold to fall off Tuesday night.

any comments would be appreciated.

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#2205210 - 02/06/19 04:28 PM Re: Case by Case Hold - Customer Not Present Gotwood
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
CBC holds have very little delay (as you know). If you have a reason to doubt the collectability of the check, then you probably do have an exception hold reason. I also understand that most banks will not verify checks (using Privacy as their excuse - which is really unfounded), but there are other reasons to place a "reasonable cause" exception delay. The regulation says that the model form does not list all of the reasons you might have. Could there be another reason to justify your doubts? You mention you suspect fraud. Why? If you can justify this, I think you have a reasonable cause to delay the availability of the check.

If not, you can't delay the availability.
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David Dickinson
http://www.bankerscompliance.com

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#2205229 - 02/06/19 06:04 PM Re: Case by Case Hold - Customer Not Present Gotwood
Gotwood Offline
Platinum Poster
Joined: May 2001
Posts: 715
Mr. Dickinson, we are identifying patterns with an issue called Card Cracking. Fraudsters recruit people from job sites, college students and even high school kids for opportunities to make “quick cash”. They have the customer deposit small bogus checks (less than the large dollar amount exception) on Monday before our cutoff time and withdrawal the funds the Tuesday morning. The customer then claims their ATM card was lost or stolen and their $500 deposit is gone. The challenge is we can't determine it fits the pattern until Tuesday. We are trying to stop the funds from leaving the bank in the first place and deal with the issue on the Reg E dispute side. On the dispute side, the issue is moot because the funds were bogus to begin with.

When we can get the customer to admit they gave their card and PIN to someone, we do deny the claim and document the reason, but it is getting harder because the fraudsters are telling the account holders to not say anything and that they lost the card with the PIN# written on it, etc.

Should we simply place an exception hold for reasonable cause to doubt collectability and deal with those instances where the customer complains and the check clears - then deal with the reg e dispute separately?

i should note, we place holds on less than 2% of our check deposits and 90% of those are large deposit holds.

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#2205258 - 02/06/19 08:15 PM Re: Case by Case Hold - Customer Not Present Gotwood
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Are these deposits into your ATMs (proprietary)? If not, you can delay nonproprietary ATM deposits - if you disclosed it.

If that's not the case, the only other solution is to not make funds available for immediate withdrawal (or same day/next day). But that requires a change to your initial disclosures (a 30 day wait) and may make other customers unhappy. I don't think you can use the "reasonable cause" hold across the board on all ATM deposits. I also don't have a "cure" for your dilemma. You may have to simply see this as a cost of doing business. Sorry.
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David Dickinson
http://www.bankerscompliance.com

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