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#665875 - 01/12/07 08:46 PM Returning Check for Uncollected Funds
HR Banker Offline
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A hold is placed on a deposit account and checks come in against the funds being held. The checks are returned stamped NSF. Shouldn't the checks be stamped as uncollected funds? Should the customer have been charged NSF fees when the actual reason for return was due to a hold on the funds in their account?

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#666082 - 01/13/07 05:06 PM Re: Returning Check for Uncollected Funds HR Banker
BurntSienna Offline
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Midwest
I would answer your questions as follows: Yes, I think such checks should be returned stamped "Uncollected" not "NSF". No, in my humble opinion, NSF fees should not be assessed on checks returned for uncollected funds.

My bank returns checks for the reason "Uncollected Funds", which is noted in our core software, and our processor (we are outsourced) stamps these checks "Uncollected" and returns them. My bank's policy is to not charge NSF/OD fees if the check is returned for uncollected funds (i.e. the account isn't actually in the negative, but the current collected balance isn't sufficient to cover the funds being drawn by the check).

Of course, to be quite clear, with the customers with accounts marked for "pay on collected funds only", we will still return checks stamped "NSF" and charge them service charges (OD), when/if the account actually goes negative.

Hope this helps.
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#666086 - 01/13/07 06:25 PM Re: Returning Check for Uncollected Funds BurntSienna
#Just Jay Offline
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I too agree with the first question, stamp as uncollected.

On the second one, my prior large Chicago/Minneapolis regional bank returned them as uncollected, but still charged the customer the NSF/Uncollected fee, which was $32 when I left them.

I do not agree with this practice. My current bank, we pay checks againest uncollected funds as a courtesy.
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#666112 - 01/14/07 05:38 PM Re: Returning Check for Uncollected Funds #Just Jay
John Burnett Offline
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Subject to any applicable state law, it's permitted to charge a fee for drawing on uncollected funds, whether the item is paid or not. Of course, you can only do it on a consumer account if you disclose the fee properly.

And I'd make certain your use of the term "uncollected funds" actually refers to funds not subject to a Reg. CC hold.
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#1397753 - 05/28/10 04:23 PM Re: Returning Check for Uncollected Funds John Burnett
reknab Offline
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What should be used for funds that ARE subject to Reg CC hold.

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#1953820 - 08/15/14 08:17 PM Re: Returning Check for Uncollected Funds reknab
river girl Offline
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I know this is an old thread but this is our situation currently.

If we place a hold on a deposit (give $200) and the next day a transaction tries to clear and due to the hold, there isn't enough $ in the account, can we return the transaction as uncollected funds?

The next day the hold falls off and the $ is now available.

Doesn't seem right to return a check just because we chose to place a hold.

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#1953825 - 08/15/14 08:26 PM Re: Returning Check for Uncollected Funds river girl
Elwood P. Dowd Offline
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Back in 1988 your bank could have chosen to be a "delayed availability" institution and held every local check until the second day and every nonlocal check until the fifth day. Apparently, your bank chose not to do that across the board, but reserved the right to do it on a "case by case" basis.

So, when you exercise the right to impose a case by case hold (which has now dwindled to only two days) you are not required to give a reason. "Uncollected funds" is an accounting term and it has no bearing on the basis for the case by case hold whatsoever. (Note John's post above.)

If you are returning the check because of the hold all you have to do is say "Funds subject to hold."

You don't need a reason for a case by case hold and "uncollected funds" is simply a wrong reason for an exception hold. As for the morality of returning a check because you placed a hold, if you followed the rules you told your customer that you were going to do it and he should not have written a check that put you to the test.

If it helps, you're not obligated to send the check back because of the hold, you're just allowed to...give any dispensations wisely as your job may hang in the balance.
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#1953979 - 08/18/14 02:56 PM Re: Returning Check for Uncollected Funds river girl
SeekingKnowledge Offline
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Originally Posted By: river girl
Doesn't seem right to return a check just because we chose to place a hold.


The hold was presumably placed on the deposited funds because the financial institution had a reason to doubt its collectability and exercised its rights under Reg CC. Not returning the check basically nullifies the FI's efforts to protect themselves. The FI is not being mean spirited. As Ken noted, the customer is the one who wrote the check prior to funds becoming available.

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#1953993 - 08/18/14 03:17 PM Re: Returning Check for Uncollected Funds HR Banker
RBanker Offline
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Austin Texas
On the other hand it doesn't seem right for the customer to write the check when told by the bank that they would not be making $x of funds available until a certain date.
Last edited by R Banker; 08/18/14 03:18 PM.
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#1954133 - 08/18/14 06:31 PM Re: Returning Check for Uncollected Funds RBanker
RR Sarah Offline
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If you are going to make the funds available despite the hold, why place the hold on the funds in the first place?
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#1975312 - 11/07/14 08:37 PM Re: Returning Check for Uncollected Funds HR Banker
madukes Offline
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Our bank usually pays uncollected funds without a fee however our account agreement indicates they are subject to the same fee as if they were nsf.

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#1975319 - 11/07/14 08:46 PM Re: Returning Check for Uncollected Funds HR Banker
rlcarey Online
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Uncollected funds???? - what does that have to do with your ability to refuse to pay checks??? Either the funds are available or they are not.
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