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#345507 - 04/11/05 09:03 PM US POSTAL MO AND EXCEPTION HOLD
Kay Offline
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Joined: Mar 2004
Posts: 248
Midwest
I have read several previous threads regarding US Postal Money Orders and it appears that many banks have become victim to the counterfeit money orders. Our question is can we implement a policy that if we cannot verify the legitimacy of the money order that we place an Exception Hold using the "reasonable cause" exception. Is "reasonable cause" legitimate to use on an Exception Hold if we cannot get verification from the Postal Money Order Fraud Hot Line. Will we be questioned on that by examiners? Is it really better to send the postal money order for collection?

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#345508 - 04/11/05 09:18 PM Re: US POSTAL MO AND EXCEPTION HOLD
Anonymous
Unregistered

I don't think placing a hold would do very good, our Postal Money orders didn't get returned to us for two months. There isn't a hold that would cover a two month period of time. You would still be stuck

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#345509 - 04/12/05 03:20 AM Re: US POSTAL MO AND EXCEPTION HOLD
RVFlyboy Offline
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I do know that Reg CC prohibits you from placing any type of exception hold based on a class of check or instrument. That means you cannot put a "reasonable cause" hold on it just because it's a postal money order and there are a lot of counterfeits out there. I have also heard anecdotally from several examiners that you cannot place a "reasonable cause" exception hold just because you cannot verify funds. You'd have to have some other factors present as well. I've also heard anecdotally from examiners that they would be critical if you adopted a policy of sending all postal money orders for collection - they say its just a technical way of circumventing the requirement and placing a longer hold period on a class of instruments. So where does this leave you from a fraud prevention standpoint? I really don't know - there needs to be some balance in here between not sticking it to the consumer but not putting bank funds at risk. I do know that if there is a question in my mind, I'd almost always rather take the Reg CC violation than the fraud loss, especially on items over a certain dollar amount.
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#345510 - 04/12/05 11:50 AM Re: US POSTAL MO AND EXCEPTION HOLD
Pup Offline
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They are easy enough to spot that I don't see that a hold would be necessary. Have you seen the brochure from USPS? We've caught a couple simply because of this brochure.

I'll also echo that the time frames just don't add up, and the hold will likely be long expired by the time a MO is charged back. A hold, IMO, is more of a dangerous false sense of security.

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#345511 - 04/12/05 03:03 PM Re: US POSTAL MO AND EXCEPTION HOLD
RBanker Offline
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IF there was a concern, could we send the item for collection?

PS - Thanks for the link FP - very helpful.
Last edited by TexTrainer; 04/12/05 03:03 PM.
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#345512 - 04/12/05 08:43 PM Re: US POSTAL MO AND EXCEPTION HOLD
Greg Offline
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Joined: May 2004
Posts: 833
Michigan
We've told our tellers to do two things:

1) ask questions - try to find out where the customer got the PMO's and why. If they're "helping out a friend" or don't know why they got them, look out. If they still insist on depositing them, send them for collection (you have sufficient anectodal evidence to doubt collectability) or...

2) if they can't get comfortable (especially if it's a non customer) send them down the street to the Post Office - let them take the risk. The Post Office has been very understanding when we've sent folks their way.

We've been stung twice and a hold would not have helped either time. Fortunately we were able to get our money back from the customer in both cases but that's not a winning streak I care to ride.
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#345513 - 04/12/05 08:53 PM Re: US POSTAL MO AND EXCEPTION HOLD
John Burnett Offline
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Anecdotal suggestions from examiners notwithstanding, I'd strongly recommend sending any USPS MO for collection if you are unsure of its authenticity. There simply have been too many fraud cases for you to ignore the potential loss.

Some common sense can enter into your decision on these items. For example, does it make sense for your customer to be depositing PMOs? Does the dollar amount seem reasonable given what you know about your customer? Has your customer told you how he or she (or it) came to receive the PMO? If it's a couple hundred bucks sent to junior away at college, that's a low risk situation. If it's a $990 PMO or a group of them and they came from a sale on eBay, that's a riskier situation.

I would not consider forcing collection on a PMO unless I had attempted and failed to get a warm fuzzy feeling from a source at the Postal Service.

And I agree with the suggestion that you have to balance the risk of loss against the potential for a Reg. CC violation. The problems with PMOs are simply to egregious to ignore.

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#345514 - 04/13/05 01:40 PM Re: US POSTAL MO AND EXCEPTION HOLD
Elwood P. Dowd Offline
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I'd consider taking the hit for the Reg CC violation, right up to the point where I was looking at returning a check drawn by the customer due to an illegal hold. That would move me into "wrongful dishonor land" and I'm not willing to take that hit.

Can anyone who has received some of the fraudulent items back say how long it was between deposit and return?

I have no idea how to send them for collection, but can testify that purchasing an international money order from the P.O. (which has to be done through the mail) took more than 6 weeks.

My suggestion is: "Grill the customer before accepting the items for deposit."
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#345515 - 04/13/05 07:08 PM Re: US POSTAL MO AND EXCEPTION HOLD
Greg Offline
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Michigan
Quote:

Can anyone who has received some of the fraudulent items back say how long it was between deposit and return?





1st hit: Deposited on 1/10 notified of return on 2/18.

2nd hit: Deposited on 3/14 notified of return on 3/30.
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#345516 - 04/13/05 08:03 PM Re: US POSTAL MO AND EXCEPTION HOLD
John Burnett Offline
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There are anecdotal comments in the threads that 2 months is not impossible.
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#345517 - 04/19/05 02:38 PM Re: US POSTAL MO AND EXCEPTION HOLD
SHORT STUFF Offline
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Quote:


I have no idea how to send them for collection,




How does one send items for collection?? We've never done that before. There are a few items at times that this would come in handy.
Thanks!

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#345518 - 04/20/05 02:40 PM Re: US POSTAL MO AND EXCEPTION HOLD
Anonymous
Unregistered

I have heard that it is acceptable to either send these for collection...or... instruct the customer to protect them and the financial institution, we recommend the deposit to a savings account -- REG CC doesn not apply and you can hold the funds without violating the regulation.
You do not have to accept the deposit and can direct customers to savings account deposits for thier protection and yours.

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#345519 - 04/20/05 05:03 PM Re: US POSTAL MO AND EXCEPTION HOLD
John Burnett Offline
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In several states, savings accounts are covered by Regulation CC under state law.
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#345520 - 04/22/05 05:58 PM Re: US POSTAL MO AND EXCEPTION HOLD
tslachta Offline
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What states allow Reg CC to cover savings accounts??

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#345521 - 04/22/05 06:21 PM Re: US POSTAL MO AND EXCEPTION HOLD
John Burnett Offline
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Please don't post the same question twice.
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#345522 - 04/22/05 07:17 PM Re: US POSTAL MO AND EXCEPTION HOLD
RVFlyboy Offline
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Quote:

What states allow Reg CC to cover savings accounts??



All of them.

More to the point, some of them require savings accounts be treated the same for hold purposes as checking accounts.
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#345523 - 04/25/05 06:28 PM Re: US POSTAL MO AND EXCEPTION HOLD
Anonymous
Unregistered

We recently ran across some fraud postal money orders, you can speed up the process of identifying these. On the US postal web site, there are examples of the money orders and also a posting of bad numbers. Also, if you present the numbers to the US postal service they can check them.

In our case the numbers were not on the list, but after a day or two, the US postal service confirmed they were no good.....they were already cashed!

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