What do most banks do with a Stop Payment>

Do you allow the Stop to first post as a debit to the customers account and then return it, or do you have it hit an Exception Processing Report and return it immediatey without ever debiting the account?

Where can I find some verbiage in the Regulations about Stop Payments?

Section 4-403 http://www.law.cornell.edu/ucc/4/article4.htm#s4-403

previous life, ACH posted and was reversed, checks were stopped before posting. used 2 different software packages to make this happen...

I am working at a bank that has elected to make stop payment orders effective for 12 months, but no one can remember the reasoning. Is this a problem? Can a bank elect to allow a stop payment order effective for a period of time longer (or shorter, for that matter) than that specified in UCC Article 4-403? I'd appreciate any thoughts.

The UCC allows the effect of its provisions to be altered by agreement of the parties, but not the obligations of good faith, diligence, reasonableness, and care. UCC 1-302

A bank might, as a customer service, agree to make its customers' stop payment orders valid for a year, and it's unlikely that a customer would object, since that would tend to prevent disreputable payees from "sitting" on a check until a stop order expires, trying to sneak it in when the customer's guard is down. The only person with a reason to complain would be the payee on the check or other item, and he/she/it has no legal recourse against you for honoring the stop after the normal 6-month period.

A depositor might have a legitimate beef with your bank if you decided to shorten the term of a stop to 3 months, since the law clearly says the right exists for 6 months. It might be difficult for the bank to argue that the consumer knowingly agreed to such a change.

The only other person who might have a gripe if you doubled the longevity of stop orders is whoever pays your IT bill. Your outside servicer (if you have one) might exact a per-stop record fee, and extending stops to one year's life would increase your costs. If your processing is in-house, the costs is measured in storage costs and processing time.

Oh, one more thought -- your stop report and stop suspects report will grow in length and take more time to be attended to.

Yeah, that pretty much sums up my thoughts. This was the first bank I'd ever heard of doing this, so my initial reaction was that they might be reducing their stop payment fees by essentially giving the customer an additional 6 months for free.

The interesting thing I failed to mention in the first post is that the bank's deposit disclosure software, Deposit Pro, will not allow them to change their disclosure of the effective life of the stop pay beyond 6 months. I suggested they prepare an addendum to their deposit product disclosures detailing the change to 12 months. Even though what is not disclosed is to the customer's advantage, I'm sure someone saavy enough could try to create a problem with the inaccurate disclosure.

As you noted if you followed Andy's link, the law does not answer your question. In my experience, what banks do in this instance is driven entirely by their operational capabilities, not legal or perhaps even practical considerations. I don't have a strong feeling, but would probably prefer that it post to the customer's statement and then be reveresed just so it's apparent to the customer what we did.