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Bogus Cashier Check Warnings and Reg. CC

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We are receiving Security Alerts daily regarding counterfeit cashiers checks. Would this fall into the exception reason of "Reasonable cause to doubt collectibility" for out of state cashier's checks deposited to our customers accounts where we can place extended holds on these checks?

You are not permitted to invoke the "reasonable cause to doubt collectibility" exception based on a class of checks. If you review the Commentary to Section 229.13 you will see that the reasonable cause exception assumes that you have obtained information about the likely fate of a specific check.

To establish reasonable cause for a check that's about to be deposited, you must take some action (such as calling the drawee bank) that results in your obtaining specific information about the check that leads you to doubt collectibility. Since we're on the topic, that doesn't include the refusal or inability of the drawee to provide information. It means the drawee provides information stating that the check in question is not likely to be paid on presentment. That could mean the account is overdrawn (not applicable to cashier's checks), they have no record of the check number being issued, it's not signed by anyone authorized at the bank, the serial number matches a list of stolen checks, or the check (based on a physical description or fax) does not appear genuine, among other reasons.

The physical description concern could also stem from a review of a fraud alert that describes the differences between a genuine check and a counterfeit one.

Failing that, you can impose a large item exception hold on the amount over $5,000, or, as we have advised many times in the past, require that the check be processed for collection rather than deposit.

First published on 1/17/05

First published on 01/17/2005

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