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Procedure for Verifying Funds Over the Phone

What procedures or guidelines do you have for verifying funds over the phone with a merchant or FI?

Answer by John Burnett: First, there is no requirement that you provide such a service. Many banks, however, do so.

The overriding rule is that you should never tell the inquiring party anything other than whether or not there are currently sufficient funds available to pay the check. Make no statements suggesting that the funds will be there later, or otherwise guaranteeing the caller will get payment.

If you get enough information about the check (account number, serial or check number, date and payee) to identify the check as one on which payment has been stopped, you may say that payment has been stopped on the check, but offer no additional information.

If the account has been closed, you may say so, but don't say whether it was closed by the customer or by the bank, or when it was closed.


Answer by Ken Golliher As many banks say this practice is prohibited by Regulation P and its parallel regulations, I will add that the disclosure is permissible because the customer initiated the transaction. It would be prudent for the drawee bank to establish a reasonable belief that the customer initiated the transaction by asking for all of the information on the check; i.e. the date and check number in addition to the amount. That information could then be compared to the dates and check numbers of items recently paid to see if they correspond.

The scripted response is "There are/are not sufficient funds to pay the item at this time."

First published on 5/27/13

First published on 05/27/2013

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