We had a customer come in and tell us, she went out to eat and when she paid the bill she made the check out to the establishment and then they made her endorse the back of the check. They told her if the check would be bad the bank would have to collect the money, not the eating establishment. I have never heard of such a thing, have you? Would the bank be responsible if the customer endorses the back? Can a customer refuse to do this?

It sounds to me as if someone at the restaurant is confused about some regulation they half-remember, or picked up some misinformation somewhere. I don't see what meaning an endorsement by Mary Smith would have on a check payable to John's Restaurant, even if the check is drawn on Mary's account. It's John's Restaurant who would endorse it. They could sign it back over to Mary if they want, but of course, the check would then be hers. I suppose THEN she could endorse it back to them, but they'd still be depositing it into their account. At some point, John's Restaurant will be the bottom endorsement.

Any way you slice it, if they want to get paid by check, John's Restaurant has to take the risk the check might bounce. I don't see any way around it.

Does anyone have a different light to shed on the subject?

Maybe the term "send it for collection" was meant rather than "the bank would have to collect the money". Either way an endorsement by the maker on the back of the check would make do difference.

The customer can refuse, but the restaurant can equally refuse to accept the check. So unless you are good at washing dishes, I'd do what they asked. Besides, it really has no bearing.

The check is payable to J's Restaurant. J's endorsed the check and negotiated the item by depositing it. If it comes back, the bank will take the $$ out of J's account. Then J's will have to take it to the local DA's office and try to explain why the customer's signature is on the bank of the check. That might be fun to watch.

I went to the same restaurant and wrote a check in red ink. They made me write a new one in blue ink because red ink ment that I was stopping payment on the check. (joke)