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#2254811 - 06/03/21 06:18 PM NSF checks being redeposited
Kristi Offline
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Kristi
Joined: Feb 2005
Posts: 85
We have a customer who has written 3 checks and we have sent those checks back as NSF. The problem is, the other bank has sent those checks through multiple times (today makes the 8th times they have been presented to us) and every time we have sent them back as NSF. From what I have researched, the Federal Reserve Circular #3 states

3.0 Items We Do Not Handle as Cash Items
3.1 A sender should not send to us any item, and we do not undertake to handle an item as a cash item, if:
a) The bank on which the item is drawn has declined to pay the item two or more times. For purposes of this subparagraph 3.1(a) only, the term “the item” means a check; any substitute check, electronic check, or ACH entry derived from that check; and any photocopy in lieu of that check

Am I correct that the other bank should not have presented it for payment more than 2 times? What should we do at this point?

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#2254823 - 06/03/21 09:23 PM Re: NSF checks being redeposited Kristi
John Burnett Offline
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I recommend writing DO NOT RE-PRESENT on the face of the check and returning it one more time. And, maybe, calling the depositary bank and urging them not to send them through again.

Is the Fed actually handling the checks? The Fed Circular doesn't apply if the check isn't handled by the Fed.

What are you doing about the mounting bounced check fees in your customer's account?

Another thought -- close the account (I know, there will be charge off) and bounce any more checks for account closed.
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#2254882 - 06/04/21 07:01 PM Re: NSF checks being redeposited Kristi
madukes Offline
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madukes
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Flyers Country
We had similar situations (not nsf though). A business customer had multiple payroll checks being presented multiple times. The employee was making mobile deposits of the same checks over and over again. We informed the company; returned the duplicates and eventually put stop payments on the checks just to stop them from showing on his account. I don't think it is the other bank's fault if the person is doing mobile/remote deposits and really isn't much you can do other than stop payments or flag the account so nothing posts). We monitor our mobiles and returns. If a check is returned as a duplicate and it was deposited via mobile; that customer's access is turned off.

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#2254924 - 06/07/21 03:16 PM Re: NSF checks being redeposited Kristi
John Burnett Offline
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If I were the business customer, I'd have fired that employee (and your customer probably did). I hope that your bank's return of the duplicate presentments of the checks woke up their respective depositary banks to the fact they had a crook as a depositor and gave the depositor the boot.

Were you able to detect the duplicate presentments as they occurred, madukes, or was your customer the first to detect the problem? I imagine a positive pay system with an issued and outstanding file from the customer would have allowed you to catch them in time to make a timely (midnight deadline) return. I know there are other front-end systems that compare checks against account paid item history.
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#2254969 - 06/07/21 08:00 PM Re: NSF checks being redeposited John Burnett
madukes Offline
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Flyers Country
We were made aware through our dup detection process and returned them timely. I believe the employees (more than one eventually) were terminated. One even used the micr line from one check onto another to try and get it through. Also had an elderly customer had a duplicate check he wrote to a young man for school (about $100). The payee presented it again several months later. The elderly gent refused to let us return it - he didn't want to get the kid in trouble!

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#2254975 - 06/07/21 08:50 PM Re: NSF checks being redeposited Kristi
John Burnett Offline
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Now that's a generous gesture. It's also a little enabling of fraud. Not the kind of lesson I'd want my kid to learn.
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#2254979 - 06/07/21 10:35 PM Re: NSF checks being redeposited Kristi
rlcarey Offline
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Galveston, TX
Not to mention that if the customer changes their mind, you haven't got a leg to stand on. That is not a customer's decision to make.
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