New Account Hold

Posted By: rachelchri

New Account Hold - 06/28/11 08:59 PM

I just need some clarification. If I open up an account for a new customer, and they have a personal check (not considered a next-day item)for $6,000 can I put a hold on for the full amount for 7 days? or do I have to make the first $5,000 available the next day and then the last $1,000 available on the 7th day? It gets confusing when you look into Next-day and non next-day items!

HELP!!!
Posted By: Doug Hendrickson

Re: New Account Hold - 06/28/11 09:06 PM

If this is indeed a new customer, and the funds are not subject to next-day availbility (which they are not), you can hold the full amount of the funds for as long as you've disclosed in your funds availability policy with regards New Accounts.
Posted By: BrianC

Re: New Account Hold - 06/28/11 09:10 PM

When looking at the exceptions available to you in Section 229.13 the new account exception allows non-next day items to be held up to the ninth business day. If your bank's policy states seven days, then use that. So, yes, you can hold a personal check for 7 business days for a new customer.

You only must make $5,000 available next day if the item is a next-day item as defined in Section 229.10
Posted By: rachelchri

Re: New Account Hold - 06/28/11 09:14 PM

Ok, so my next questions would be:

If they bring in a Cashier's check from another bank, would you have to make the first $5,000 available the next day and the last $1000 available on the 7th day?

With all the scams going around with Cashier's checks, this opens us up to a big loss!
Posted By: Doug Hendrickson

Re: New Account Hold - 06/28/11 09:30 PM

A Cashier's Check is a next-day item. For a new account, you would have to make the first $5,000 available the next business day and the rest on the 9th business day. If you have any concern at all that the check is not legitimate, you can always refuse the deposit, you do not have to accept it; however, once you've accepted it for deposit you're bound by Reg CC.
Posted By: RR Joker

Re: New Account Hold - 06/29/11 01:57 PM

WEll, I think you are bound to a point. There is an exception in 229.13:

(4) For the purposes of this section, a ``reasonable period'' is an extension of up to one business day for checks described in Sec. 229.10(c)(1)(vi), five business days for checks described in Sec. 229.12(b) (1) through (4), and six business days for checks described in Sec. 229.12(c) (1) and (2) or Sec. 229.12(f). A longer extension may be reasonable, but the bank has the burden of so establishing.

If you find out the check is fraudulent, you can extend the hold. However, if you know up front it's fraudlent, I'd refuse or send for collection if the customner insists.
Posted By: rachelchri

Re: New Account Hold - 06/29/11 02:42 PM

You want them to get a good first impression, but at the same time we need to cover our butts because you never know if the check is good or not (especially when it comes to cashiers checks, and postal money orders for that fact). There's just been so much fraud going on out there, and it's hard to give the first $5,000 to a customer you don't necessarily know. This Reg really does get confusing sometimes!
Posted By: John Burnett

Re: New Account Hold - 06/29/11 03:50 PM

Originally Posted By: BrianC
When looking at the exceptions available to you in Section 229.13 the new account exception allows non-next day items to be held up to the ninth business day. Section 229.10


The ninth business day limit is imposed only on holds placed on the excess over $5,000 of next day items (including traveler's checks). There is no limit other than the one your bank discloses in its Funds Availability Policy disclosure on the holds placed on on-us checks or on non-next-day checks.