Answer:
Answer by Randy Carey:There are no "offical rules" governing this practice. It is a matter of determining proper authorizations and deciding on the amount of risk the bank is willing to accept.
Answer:
Answer by John Burnett:Some banks have decided that providing cash back to a sole proprietor is not any more risky than doing so for the owner on a personal account. I'd agree, provided that the bank is certain that the business is a sole proprietorship. For partnerships and corporations, or any form of business organization other than a sole proprietorship, there is a risk that the individual taking the cash back is not authorized to do so.
There have been cases, for example, of an employee altering a deposit ticket to take back cash, without the knowledge or authorization of the employer. Even officers of corporations don't have the right to take cash back unless there is specific authority granted by the corporation's board of directors. Most banks, therefore, have rightly concluded that providing cash back to businesses other than sole proprietorships is a practice that involves more risk than they are willing to assume.
First published on BankersOnline.com 2/26/07
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