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#277524 - 11/19/04 07:05 PM Depositing Business Checks into wrong account?
Anonymous
Unregistered

Hi,

We have a customer today who came in and wished to deposit into his business checking account checks made out to a different business than his. We told him we could not deposit the check into his business account and he got very upset saying he has done it before. If he had, it was our oversight. He wants a response in writing from us. I'm trying to craft a response to this man and I'm thinking of saying something to the effect of the UCC. Has anyone ever have to give a "reason" for not being able to do this to a customer? All responses are appreciated. Thanks.

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#277525 - 11/19/04 07:24 PM Re: Depositing Business Checks into wrong account?
HappyGilmore Offline
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Joined: Jun 2004
Posts: 19,580
Pulling people out of the ditc...
I bet if you look in your deposit contract you have wording concerning deposits and endorsements, and I would give this to him. I don't think I would want to draft a special letter just for him detailing why you will/won't accept a deposit. If someone errs down the road, you've opened yourself to additional liability.
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#277526 - 11/19/04 08:01 PM Re: Depositing Business Checks into wrong account?
Anonymous
Unregistered

I'm checking my deposit agreement now and I'm not sure I have that particular language in there. Could you tell me what language I should probably add to our agreement? Thanks for your quick response.

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#277527 - 11/19/04 08:23 PM Re: Depositing Business Checks into wrong account?
Bartman Offline
Diamond Poster
Bartman
Joined: Oct 2000
Posts: 1,191
Springfield
Ours states:

"You authorize us to accept transfers, checks, and other items for deposit to your Account if they are made payable to, or to the order of, any one or more of you, whether or not they are endorsed by you."
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#277528 - 11/19/04 09:02 PM Re: Depositing Business Checks into wrong account?
Greg Offline
Platinum Poster
Joined: May 2004
Posts: 833
Michigan
If he owns both businesses and he endorses the check properly ** what's the problem?

** Payable to Joe's Snow Removal

Endorse:
Joe's Snow Removal
Pay to the order of Joe's Lawn Care
Joes' Lawn Care

Deposit into Joe's Lawn Care account.

If you're dealing with an LLC, Corp etc. then that's a different story but these requests usually are from DBA's where the legal entity is the individual, not the business.

Not to disagree with fellow Michiganian, Bartman, but that language only allows you to accept deposits without endorsement - it does not preclude you from accepting checks payable to others.
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#277529 - 11/19/04 09:44 PM Re: Depositing Business Checks into wrong account?
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,907
Galveston, TX
Hey - aren't you guys Michiganders??

Unless the depositor can prove that they have the legal right to endorse the check for the named compmnay and deposit to their account, I wouldn't accept it. You don't need to quote regulatory verse or the law - that is just the way it is. The UCC will place the burden on you for a forgery and unless you can find this guy for the next several years and think he is going to have the money, tell him forget it. I would let him walk down the road to another bank and see what he can get away with there. However, if this is another one of his companies and you feel like making an accomodation, get some documentation and have him endorse the checks appropriately.
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#277530 - 11/19/04 10:05 PM Re: Depositing Business Checks into wrong account?
Greg Offline
Platinum Poster
Joined: May 2004
Posts: 833
Michigan
Quote:

Hey - aren't you guys Michiganders??




Believe it or not, since a "gander" is a male goose someone decided that "Michigander" was sexist. The official state designation is now "Michiganian." How very PC of us!
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If you approach life with pure logic you can avoid almost all of the fun.

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#277531 - 11/19/04 10:18 PM Re: Depositing Business Checks into wrong account?
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,907
Galveston, TX
What can I say. I left in 1978 after my first 19 years - guess I am behind the times. I would think it would be a Michigonian - you know, like a Washitonian. But then again, I'm originally a Muskegonian. Would that make me a Muskegonian Michiganian?? I think I'l go back to studying FACTA now.
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#277532 - 11/19/04 10:37 PM Re: Depositing Business Checks into wrong account?
Greg Offline
Platinum Poster
Joined: May 2004
Posts: 833
Michigan
I've been to Muskegon and I've been to Galveston - you made the right choice!
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If you approach life with pure logic you can avoid almost all of the fun.

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#277533 - 11/22/04 04:18 PM Re: Depositing Business Checks into wrong account?
HappyGilmore Offline
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Joined: Jun 2004
Posts: 19,580
Pulling people out of the ditc...
Quote:

If he owns both businesses and he endorses the check properly ** what's the problem




original post stated a business other than his...
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#277534 - 01/11/05 09:26 PM Re: Depositing Business Checks into wrong account?
Anonymous
Unregistered

I want to bump this up again and ask for an opinion on a question we have been asked. If a parent company owns two businesses, they want to make it easier for the customer that uses services from both companies, so they would allow the customer to write one check. If the company that the check is made payable to, endorses the check, can they then deposit the money into the other company? With the proper endorsement of course. Sounds like a bookkeeping nightmare to me but that is what they are asking of us. What are your thoughts on this?

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#277535 - 01/12/05 08:21 PM Re: Depositing Business Checks into wrong account?
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,365
Illinois
I'm all about customer service, but I'm also about protecting the bank from liability. Even if both businesses are owned by the same people, consider this. Business A is struggling and Business B is doing very well. Person wants to take checks payable to Business A and deposit them into Business B's account. Bank allows it not wanting to upset a good customer. Business A goes bankrupt. The creditors go to bankruptcy court and discover that they cannot locate the assets for Business A. A further audit discovers that all the money went to Business B. The creditors sue the bank and win because the bank allowed the endorsement practice to go on.

A simple way around this is to require your customer to deposit checks into the account that bears their name, and if the customer wants the money in a different account, write a check payable to the other business and deposit it into the other account. Then there is a clean paper trail of where the money went, and the bank is free of any liability concerns.
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#277536 - 01/12/05 09:05 PM Re: Depositing Business Checks into wrong account?
Anonymous
Unregistered

If the check was properly endorsed, I don't see why you would refuse the deposit? Under what statute? If you feel that he is doing something illegal, just accept the deposit and file a SAR.

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#277537 - 01/12/05 10:19 PM Re: Depositing Business Checks into wrong account?
Jokerman Offline
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Joined: Nov 2003
Posts: 12,846
Quote:

If the check was properly endorsed, I don't see why you would refuse the deposit? Under what statute?




Under what statute do you have to accept a deposit?

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#1925569 - 05/22/14 02:48 PM Re: Depositing Business Checks into wrong account? Anonymous
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,792
Cape Cod
Originally Posted By: Anonymous
If the check was properly endorsed, I don't see why you would refuse the deposit? Under what statute? If you feel that he is doing something illegal, just accept the deposit and file a SAR.


Because filing the SAR doesn't get you the money back if you get sued as suggested by Brian. This isn't about customer convenience; it's about protecting the bank.
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#1925609 - 05/22/14 03:17 PM Re: Depositing Business Checks into wrong account? Anonymous
fmissle Offline
Platinum Poster
Joined: Jul 2007
Posts: 999
Pac NW
John, are you bumping a 9 year old thread to get the last word in?
grin

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#1925727 - 05/22/14 05:22 PM Re: Depositing Business Checks into wrong account? fmissle
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
grin
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#1925851 - 05/22/14 07:20 PM Re: Depositing Business Checks into wrong account? Anonymous
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,792
Cape Cod
Actually, my browser cookies were confused, and this thread showed as unread. I didn't even notice that the darned thing was nine years old. But I sure did bristle when I saw that last anonymous post! Thanks for calling me on it, doyoucanoe. You made Ken's day! smirk
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
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#1926327 - 05/23/14 06:01 PM Re: Depositing Business Checks into wrong account? Anonymous
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 6,365
Illinois
I had to do a double take as well when I saw John refer to me as Brian. Back in 2005 I was going by "crowman3" and John didn't know my first name. smile
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