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#25915 - 07/30/02 04:37 PM Cashing Checks for Non-customers (again!)
Bear Collector, CRCM Offline
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District of Columbia
I just finished reading the thread regarding cashing checks for non-customers. We issue "offical checks" that are payable through a third party vendor. Even though they have our name on them, they are clearly payable through XYZ Bank.
If we have a non-customer wanting to cash one of these items for, say, $35,000, do we have the right to say "no"? (Yes we have ID and yes we can order the cash and yes we have prepared a CTR.) That being said, are we obligated to cash this item? My feeling is no. Besides, why can't the non-customer take this item to her bank, deposit it, and probably get next-day availablity. Is she avoiding taxes?
Anyway, I digress. the arguement is whether it would be "wrongful dishonor" when the item is not actually drawn on us.
Any takers?
Leslie
Last edited by Leslie; 07/30/02 04:38 PM.
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#25916 - 07/30/02 04:54 PM Re: Cashing Checks for Non-customers (again!)
John Burnett Offline
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Cape Cod
You ask why the payee doesn't just take the check to his/her own bank and deposit it.

One explanation might be that the payee is one of the hordes of unbanked people out there. Another might be that your bank's name appears on the check (although it's drawn on XYZ), so they figure you'll cash it.

That doesn't answer your question, but it does explain why people come to you to cash your check (drawn on XYZ).
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#25917 - 07/30/02 05:32 PM Re: Cashing Checks for Non-customers (again!)
Orrsislander Offline
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I think you should cash your own check if you obtain proper ID and complete the CTR. Your bank issued it, you should cash it.

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#25918 - 07/30/02 05:39 PM Re: Cashing Checks for Non-customers (again!)
Bear Collector, CRCM Offline
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District of Columbia
But... the question is: Do we HAVE TO (legally) cash the check?
Leslie
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#25919 - 07/31/02 02:00 PM Re: Cashing Checks for Non-customers (again!)
rlcarey Online
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rlcarey
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Galveston, TX
I guess I'm not a legal beagle, so I am unqualified to answer whether you have to legally cash this check or not. But my question would be, why would you not? I think that the reputational risk to your bank would be too great not too. I'm a person with one of your "cashier's" checks (and if you think that the public understands the difference, you need to get out more) and you refuse to honor it. I go to the news paper and boom! you get all the front page advertising you ever wanted. You never know who this customer is and by the way, is that a small camcorder in their handbag?? That's when you will really need some extra cash in your vaults.
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#25920 - 07/31/02 02:05 PM Re: Cashing Checks for Non-customers (again!)
Angel Eyes Offline
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Angel Eyes
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In my opinion if the bank that the checks are drawn on is a place of business where the checks can be taken and cashed then I don't feel that you would have a wrongful dishonor case. However, if people can not cash the checks through this other place of business, I think that you are issuing them through your bank in good faith and should cash them. There is no clear cut law but a good attorney would easily fight for wrongful dishonor and I think that they could win!


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#25921 - 07/31/02 02:35 PM Re: Cashing Checks for Non-customers (again!)
Bear Collector, CRCM Offline
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District of Columbia
I respect your opinions, rl, and yes, as a matter of fact, I DO get out on occasion. Why, just last week, I went to the grocery store! I understand all the arguments about the seamlessness to the client. However, under UCC 3-411 (c), it does state that: "Expenses or consequential damages under subsection (b) are not recoverable if the refusal of the obligated bank to pay occurs because ... (iii) the obligated bank has a reasonable doubt whether the person demanding payment is the person entitled to enforce the instrument."
I think in the case of a "non-customer", and certainly for a very large dollar item, that defense could be asserted.
When I worked for A VERY LARGE INTERNATIONAL BANK BASED IN NY, we had signs at every teller window stating that we did not cash checks for ANY non-customers in excess of $3000. I don't know if they still have that policy (I've been away for over 5 years)but I find it hard to beleive that an institution the size of that one would take the chance on a class action lawsuit if they were not comfortable asserting that limitation.
I have asked Bill Hood at ABA about this, and he is going to check with the UCC "legal beagles" at ABA and get back to me. I will keep you posted.
Leslie
Last edited by Leslie; 07/31/02 02:37 PM.
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#25922 - 08/20/02 07:33 PM Re: Cashing Checks for Non-customers (again!)
Anonymous
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Well? What did you find out? Must a bank cash on-us checks or on-us cashiers checks for non customers?

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#25923 - 08/20/02 08:03 PM Re: Cashing Checks for Non-customers (again!)
Anonymous
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So, may a bank establish a policy that it will not cash on-us checks over the counter for non accountholders?

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#25924 - 08/20/02 09:36 PM Re: Cashing Checks for Non-customers (again!)
Don_Narup Offline

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Posts: 3,708
Las Vegas Nevada
Another Perspective:

Am I a non customer if I have purchased in good faith your negotiable item for which you collected a fee? Am I not now your customer in some way?

If you have the cash and the vault won't run short, proper ID, and can get all the forms filled out, why do you not want to cash your own item?

Does the fact that I am in your bank provide a sales opportunity for me to change banks because you can accommodate my request. A refusal only reinforces my reasoning on why I should not bank with you.

Can I tell you about the time I picked up a 4 million dollar account because I OKed a $2,500 cashiers check drawn on our bank for a non customer.

Andy Z mentioned in another thread something that applies here as well. It becomes a risk management and service issue.

Each presentment may need some individual decision making, but each presentment is an opportunity that should not be overlooked.

Can you decline to cash an on us item for a non customer? Sure, but let the circumstances be your guide. Sometimes you have to do the right thing and not necessarily whats right. Making those decisions is what supervisors and managers get the big bucks for.
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#25925 - 08/20/02 09:45 PM Re: Cashing Checks for Non-customers (again!)
Anonymous
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Do you agree that a bank could have a policy to not cash over the counter any on-us checks from noncustomers?

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#25926 - 08/20/02 10:16 PM Re: Cashing Checks for Non-customers (again!)
Don_Narup Offline

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Las Vegas Nevada
There is no prohibition on creating any policy. Just because its a policy doesn't make it right. In this case I believe turning away all non customers could result in someone or group eventually filing a law suit.

Do you sell Cashiers Checks to Non-Customers? On us items like Cashiers Checks, are obligations of the bank, and if you sell them too, but refuse to negotiate them for a non customer, there are a dozen attorneys that would take my case. Plus, I think you could very well open the door to discriminatory practices.

I am not an attorney and the above is my opinion. As a former CEO I would not allow the policy to be established. Especially, as I haven't heard one good argument as to why there should be such a policy.
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#25927 - 08/20/02 10:23 PM Re: Cashing Checks for Non-customers (again!)
SJB Offline
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California
Please clarify what you are calling an "on-us" check. A customer's check drawn on the bank (my understanding of the term) or the bank's own check drawn on the bank (classic cashier's check?)

How could you have a policy of refusing to cash your customer's checks that are presented at the counter? Isn't that the oldest form of presentment? (Assuming no ID, endorsement or availability of funds issues.)
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#25928 - 08/21/02 01:19 PM Re: Cashing Checks for Non-customers (again!)
Bear Collector, CRCM Offline
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District of Columbia
I did hear from the ABA, but I have been swamped with other issues, and it has taken me a while to wade through the information they sent.
Based on the commentary to Reg CC, banks may limit the amount of cash that may be withdrawn at a teller station as long as that policy is written, communicated, and applies equally to all customers (non-customers?) of the bank based on security, bonding, or operating requirements. However, a bank cannot authorize such policies if they are otherwise prohibited by statutory, regulatory, or common law.
Which brings us to the UCC, which prohibits wrongful dishonor. The only reason we could use in this case would be that we had a "reasonble doubt whether the person demanding payment is the person entitled to enforce the instrument". (After listening to Mary Beth's identity theft webcast, I don't believe ANYBODY is who they say they are!)I think this is an issue we are going to have to explore with our General Counsel before we put any hard and fast policies in place. I think the question is "Does limiting the amount of a negotiable instrument a non-customer can cash at a teller station constitute wrongful dishonor under the UCC?"
Leslie
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