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Discrimination on a Class of Checks

Can we send all insurance checks for collection rather than deposit them? In other words, can we discriminate against a class of checks if the items aren't being deposited?

Answer by Jim Bedsole:There is no law or regulation prohibiting this practice. The only related issue I know of is the Reg CC requirement that says you cannot place a "Reasonable Cause to Doubt Collectibility" exception hold under 229.13(e) on an item based on it being of a particular class of check or deposited by a particular class of persons. As to not accepting a particular class of checks for deposit at all, unless that is regulated by state law, I don't know of any federal restrictions.


Answer by Ken Golliher:I agree, and add that Regulation CC even reinforces the idea that it does not require you to accept an item for deposit:

229.19(c) Effect on policies of depositary bank. This part does not-- (1) Prohibit a depositary bank from making funds available to a customer for withdrawal in a shorter period of time than the time required by this subpart; (2) Affect a depositary bank's right-- (i) To accept or reject a check for deposit;

A couple of decades ago when Reg CC was published, regulators frequently offered the observation that refusing to accept items for deposit and offering to send them for collection violated the spirit of the regulation. Given the excerpt above, that was obviously untrue, but the myth still survives.

First published on 9/04/06

First published on 09/04/2006

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