I am relatively new to my position in Deposit Operations and I was hoping to get some opinions on a situation that we face periodically.

When customers file an affidavit saying that the payee of a check is altered, our Payment Operations team sends the claim to the bank of first deposit. I understand that there is communication back and forth between my institution and the BOFD and that the entire process can take months to complete. All the while, we have not offered any sort of provisional credit to the client.

My questions are:
Is it normal for customers to not be given any provisional credit while this process works itself out? If it is typical to provide provisional credit for check claims, do you differentiate between consumer and business accounts? And, has anyone had any formal complaints submitted against their institution because the bank failed to provide a provisional credit?

Thanks so much for your input.

we do not provide provisional credit, no requirement to do so.

now, depending on the client and amount and relationship, etc., we may opt to do so, based on feedback from banker. but that does not occur very often.

So no strict requirement to do so. Great. But in the instances mentioned above when you may opt to do so, what are some good ideas? A provisional credit letter to document and make clear it is provisional is a start in my mind.

if you are going to start sending a new letter concerning notification of credit, provisional or not, to your customers based on internal criteria, not regulatory required, i strongly suggest engaging your legal counsel to draft that letter.

Thank you both for the feedback!

One more feedback item? How many customer claims involving altered payees does the bank get? Is this something significant enough to make policy and procedure over?