What Return Reason Code?

Posted By: Jenny Roberts

What Return Reason Code? - 04/09/20 08:11 PM

I know nothing about returning checks that are fraudulent and the one that does them is at the bank and won't answer her phone frown

We have a business that had some fraudulent checks clear their account and wondering what return reason code we use and how long after they paid, do we have to return them? The checks were slightly altered.
Posted By: BrianC

Re: What Return Reason Code? - 04/09/20 08:15 PM

If you are past your midnight deadline, you can't return via the Fed. What was altered? Payee name, amount, maker signature?
Posted By: Jenny Roberts

Re: What Return Reason Code? - 04/09/20 08:20 PM

I was just now told they were not altered but they were not written by the customer. Sounds like someone has maybe intercepted a check in the mail and has possibly created their own checks...
Posted By: BrianC

Re: What Return Reason Code? - 04/09/20 08:50 PM

Your institution (like most) makes a risk based decision to not review every check that clears your bank. However, the duty to identify and return a forgery by your midnight deadline rests with your institution. The bank of first deposit has know way of knowing if your customer wrote the check or not.

Unless you and the bank of first deposit are part of the same clearinghouse and have a contract to share liability, your institution is on the hook for any checks not returned by the midnight deadline. If you send them back through the Fed, the bank of first deposit can make a claim of late return and send them back to you.
Posted By: Jenny Roberts

Re: What Return Reason Code? - 04/09/20 08:53 PM

That's what I thought. Thanks!