We have a customer wanting to send out loan checks to the community. These checks would have void after 30 days and the customer wants the person cashing these to write their phone number, social security number and date on the back of the check when cashing. We have never had a customer wanting to do this before and want to know what kind of liability our bank would have on these such as if we cash one past the 30 days or if the customer does not write all of the information on the back of the checks that the customer requests.....we normally don't cash loan checks.

If you are old enough, you may remember the TV series "Lost in Space" and a cyborg that intoned "DANGER, Will Robinson" to a kid involved in the story. This would be an occasion for one of those warnings, if your customer were also in the story line for the show.

Let's start with the obvious ---
1. Is your customer licensed to make loans in your state?
2. If he's not licensed, on what grounds is he asking for SSNs from the folks the checks are payable to?
3. Do you want to be in the middle if one of the checks is paid and doesn't have the requested info on it?

This guy's heart might be in the right place, and he may be flush while neighbors are wondering where their next meal will come from, but you have no idea what his plan is regarding repayment of these "loans." That wouldn't involve the bank, but the bank will be mentioned in news articles if this plan goes sideways and the guys starts sueing to get his money back.

Just too many negatives here.

Likely your account agreement already indicates that you are not liable for any restrictive endorsement requirements placed on a check by the customer. But I would get your legal counsel to review the situation. The next question is why is the bank involved with such a customer. Usually these are somewhat considered predatory lenders.

Thank you for your assistance