Reg CC

We had a customer deposit a check off of an account of theirs at a different bank. There was not a hold placed on the check at that time. The check was returned to us today as NSF. The customer is several hundred dollars short in their account to charge it back to so the officer said to run the check back through a second time and to place a hold on the account for the entire amount of the check in case they would make a deposit. I am afraid that would be against Reg CC but wanted another opinion?? Thanks!

Regulation CC allows an exception hold for a "redeposited check." Generally, the idea is based on the fact that the item was debited back to the account and then the customer redeposited it.

Here, it sounds as if the officer is simply making a decision to re-clear the item without notice to the customer.

Correct, the item is technically being "redeposited" so I didn't think that exception hold would work....

I mis-spoke, the item it NOT technically being redeposited...

An alternate way of handling the problem would have been to charge the bounced check back to the depositor, sending him the required Reg CC/UCC notice, and contemporaneously redeposit the check to the account for the customer. Then you would have an exception hold available to you, and it could have been for the entire amount of the redeposited check.

Is a notice to the customer required if no fees were assessd for the redeposited check?

Yes, the payee is entitled to notice of dishonor.

Banks that automatically reclear returned items without actual permission from the customer assume substantial amounts of risk.

A notice of dishonor is required under Reg CC §229.33(d) and under section 3-503(c) of the UCC, unless the notice is waived by the party entitled to notice.

Thank you!!