Currently, if a customer calls in to make a stop payment request, we place the stop for 14 days. If they follow up in writing or online, we make that stop permanent. If they do not, the stop lapses. Service is asking if we can remove the follow up requirement and make verbal stop pays permanent as well. It is a customer pain point and we would like to remove that if possible. Is there a requirement that we must have a written follow up in order to extend a verbal request?

I was able to find the following:

§ 4-403. CUSTOMER's RIGHT TO STOP PAYMENT; BURDEN OF PROOF OF LOSS.
(b) A stop-payment order is effective for six months, but it lapses after 14 calendar days if the original order was oral and was not confirmed in a record within that period. A stop-payment order may be renewed for additional six-month periods by a record given to the bank within a period during which the stop-payment order is effective.

Our previous General Counsel gave a thumbs up to make requests permanent, instead of 6 month intervals, but said we had to have a written follow up for verbal requests. I thought I would revisit this since it would be beneficial to the customer not having to follow up in writing. I should add that all of our calls are recorded and callers are confirmed so we have little concern for a "I never requested that" dispute.

Thoughts would be appreciated.

No requirement that I have discovered. If you want to provide your customer with a stop pay without written follow up you are welcome to do so. One risk you run by accepting verbal without written is you have no "proof" the customer requested the stop pay. Not a big risk and one that would not likely arise.

Thank you. That is what I thought but wanted to confirm.

One caveat -- believe it or not, some customers know what the law says and might feel that, if they don't confirm an oral stop in writing, the stop will be void after 14 days. I'd just suggest that customer-facing employees be trained to state, when taking an oral order, that the bank will made the stop payment effective for 6 months (or permanently) without the need for written confirmation.

What has your experience been with permanent stops? Are you getting longer stop suspect reports? Does it take longer to process stop payments in the morning? Are you paying a processor a fee for each stop record on file?

Does your state law allow you to confirm in writing that stop pay was received? If so, you don't have to wait for John Doe to wander in and sign but you can send acknowledgment that a stop for check X for $Y was received on date and is valid for six months.

As I recall the standard UCC verbiage is silent on who confirms the stop order.

As a side issue, notice that the language in the UCC usually refers to an "oral" stop order, rather than "verbal." That's because "verbal" literally means "using words," which can be oral or written (or signed, using ASL). "Oral" is less ambiguous.

I have seen a number of instances where the information on the stop payment on our system is incorrect such as wrong check number, account number in place of check number, etc.. Personally I would want a signed order from the customer stating they reviewed the order and the information is correct.

Your bank can change the effects of an oral stop pay, but you will need to review all of the documents where it is mentioned and bring their verbiage into line. Confirming an oral stop payment in writing is a "best practice" in my opinion, but this would make it even more important.

However, ff you have advice from your bank's attorney, I suggest you take it or ask for a second opinion rather than shopping it here.