as a community bank we send for adjustment encoding errors which were made by the bank of first deposit and instead of receiving a cashiers check we receive a letter stating: " as a policy X bank does not handle adjustment or requests for information for amounts of $100 or less, nor do we make request of other institutions for research under $100. If you feel fulfillment of this request is necessary, our practice is to charge a $35 fee for low dollar research. Please re-submit your request with an official check for $35 made payable to X bank and we will fulfill your request." Our request - they made the mistake and we must either take the loss or send a second request and receive $35 less! Why and how can they legally do this when they encoded the item incorrect. Any assistance in quoting a regulation or ways to require them to pay the full amount would be appreciated. THANKS!
louise

We received the same reply today from Bank One (( Bank x )) as you say. I know nothing about the legality or regulations on this matter. We all probably should degin doing the same.

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Bill Dean
Opinions stated are not necessarily that of my employer.

The same concept is used whe banks charge customers a $10 per hour account research fee . A customer claims a potential error and the bank needs to research it and charges the customer.

"Bank X," as you have so kindly dubbed them, is doubtless counting on the fact that if you are irked enough about their fee to take some sort of action to force them to pay the full amount, you'll spend more on your legal advice than it's worth.

• Catch 22
  
• Gotcha!
  
• Where does a 300 pound gorilla sit? Anywhere it wants!

I think that someone needs to step to the plate and push this issue with Bank X. Bank X has effectively warranted that the items are encoded correctly. As a holder in good faith you are entitled to damages under the UCC, to include expenses and loss of interest incurred (see below). I’m not sure on what legal basis they can charge you to ascertain whether they beached their own warranty??? I would turn around and include their fee in the damages claimed, plus your own expenses for research and loss due to the lost use of funds and see what they have to say about it. I’m assuming of course that the UCC in the state in which they do business is similar.

4-209. ENCODING AND RETENTION WARRANTIES. (1) A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warranty. (2) A person who undertakes to retain an item pursuant to an agreement for electronic presentment warrants to any subsequent collecting bank and to the payor bank or other payor that retention and presentment of the item comply with the agreement. If a customer of a depositary bank undertakes to retain an item, that bank also makes this warranty. (3) A person to whom warranties are made under this section and who took the item in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, plus expenses and loss of interest incurred as a result of the breach.

Bank "X" is also a bank that continually pushes the compliance envelope. They recently settled a CLASS ACTION lawsuit that alleged a practice wherein they HELD PAYMENTS for up to three days in order to assess the $29 late fee on their credit cards.

THIS is the type of mentality that will lead to more onerous regulations.

However, do you think anyone will pass a regulation to protect smaller banks from Bank "X"?