Help
I need some expert advise.
Our bank today announced that we cannot accept any checks to be deposited if they are stamped,"for deposit only", that these require a signature along w/ the stamp.
Any check deposits in the ATM w/ "deposit only" must be handled as an empty envelope and not processed.

Go to BOL HERE for some on point input.

I just cannot see your new policy as customer friendly and just treating ATM deposits that do not have a complete endorsement as empty envelopes is way beyond the pale. On the surface, it's not aligned with several regulations, but hopefully (I'm assuming) the check will be returned to the depositor for endorsement, correct?

With that said, I like to be one of your competitors with this type of policy in place in your shop!

Also, if you're going to put this policy in place shouldn't you give your customer's 30 days advanced notice?

Why not instead stamp it "Credit to the account of Named Payee" or is this not an acceptable endorsement?

I would advise your customers to sign their checks under the "For deposit only" before enacting the policy.

If we get endorsements "For Deposit Only" we use our "Credit to the Account of the Within Named Payee" stamp. I think you will have unnecessary returned items if a customer's check is not deposited in a timely manner; this will only send your customers to the other bank up the street that does not have this policy. We used to get "For Deposit Only" items frequently too; customer education is the key to decreasing these.

A notice is probably not required, as "for deposit only" is technically not a "complete endorsement," so if a bank wants to return deposited checks for that reason they can without disclosure, but I would not put the policy in place in the first place. Actually, the notice would be a real strange thing to send out.

There are very few scenarios in which an actual payee endorsement is required (insurance checks come to mind), so the "cost" of re-training customers isn't worth the effort and cannot be justified from a risk point of view.

I agree that foreign ATM deposits should be handled with an extra degree of caution. But for OTC deposits and even ATM deposits by your own account holders, I would use the absence of endorsement stamp.

I don't see a problem with depositing when stamped "for deposit only" UNLESS check is not payable to the same and the account holder where they want to deposit it.

foreign ATM deposits

Are you actually allowing foreign ATM deposit activity? I was not aware that FSB's were doing that, just credit unions.

I think foreign in the case means an ATM serviced by a bank other than the depositing bank. I thought everyone did this.

I don't think so. In the credit union world, they have a system in place that allows a customer of say, NoFedTax CU, transact business (ATM, Lobby, etc.) at say, NoStateTax CU. Through the "system," NoStateTax CU processes the business (deposit, etc) which posts through the system to the customer a NoFedTax CU.

In other words, your customers can deposit here and my customers can make a deposit at your institution. Are you saying that practically everybody is doing it in the banking world?

Foreign ATM transactions are a common and a profitable occurance, but foreign deposits - deposits to another bank would be very unusual, based on my experience.

In reply to:

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In other words, your customers can deposit here and my customers can make a deposit at your institution. Are you saying that practically everybody is doing it in the banking world?

Foreign ATM transactions are a common and a profitable occurance, but foreign deposits - deposits to another bank would be very unusual, based on my experience.

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Yes, in other words your customers can deposit into our ATMs and our customers into yours.

I've personally done this since I opened my first checking account.

When our ATMs accepted deposits (they don't now) my IT folks told me when I was looking at this, that the little deposit door didn't open if the ATM card wasn't ours.

We never thought we lost any business over this and we felt there was a savings in our costs. Now, our machines just don't do deposits. That is regulatory simplification.

O.K., but don't use my ATM's to make a deposit, please.

You clearly are participating in the same type of system as credit unions - that type of activity just hasn't been happening around here.

Re: foreign ATM deposits - We just got burned on a fraudulent Treasury check endorsement, deposited at our ATM by another bank's customer. We contacted our ATM service about discontinuing allowing foreign ATM deposits. They said there is a doctrine of "fair is fair," where if we discontinued, our customers wouldn't be able to deposit at other ATMs.

Since we are a one-bank bank, management felt that the inconvenience to our depositors would be too great. Maybe that will change when we get burned for larger amounts when the bad guys figure out that we still allow foreign deposits.

Well, it appears that interbank deposits at ATM is more available then I thought it was - perhaps it's a state-by-state scenario.

I heard of another situation in the CU world that involved a huge loss - checks payable to a business were deposited to a personal account through a foreign ATM and the handling bank was not on the ball, so the depository bank took the loss without an opportunity to review the actual transaction.

Based on the above scenario, I'm a little surprised that your bank took the loss, since you were simply acting as a surrogate for the depository bank.

A quick reference would be to refer to the UCC (Uniform Commercial Code) on matters of endorsements. I recently crossed paths with just such a question. I think you will find you answer in either Articles 3 or 4. Just a quick refresher, I the deposit is to an account of the within names payee, the restrictive endorsement, "For deposit only" can be used by simply writing the account no. of the payee under the restrictive endorsement or due to new privacy laws and the threat of fraud, the usual stamp message, "To the within named payee" will suffice under current UCC, however, you should also check your state laws to be sure they concur with or have adopted the articles of the UCC. Hope this helps!

We used to belong to a network that featured interchange deposits. The network's operations manual required that the account holding bank indemnify the ATM operator if an interchange-deposited check bounced. The requirement hinged on prompt notification by the ATM operator to the account holding bank (I think there was a same day notice requirement). The account holder then had to purchase the offending item, which was endorsed to them for collection purposes.

We dropped that network a while back -- and interchange deposits with it. We've looked a couple of times at whether we want to use NYCE's interchange deposit features, and each time we've come to our senses before "signing up." There's enough potential for ATM deposit fraud with "on us" transactions. We didn't want to compound it!

I will admit there was a five day hold on these deposits (except for the first $100). So if the envelope came up empty you never got the amount credited to your account. And if you had drawn against the $100 and you didn't have enought to cover it you'd get charged $20 overdraft.