Answer:
This item has been converted to a "POP" entry under the ACH rules. It's not a check anymore, it's an electronic funds transfer and, as you suggest, the "two signatures required" language in your contract is rendered meaningless. (Note that "business size" checks cannot be converted to POPs.)
I suggest you let your customer know immediately and in writing that allowing their checks to be converted to EFTs voids that portion of your contract; i.e. it renders it impossible to enforce. If you wish, you might suggest that the customer go to the business size checks in order to prevent this happening in the future. (I would not make that suggestion.)
Many banks have discontinued acceptance of "two signatures required" accounts except when required by a court order. You might consider doing so as well.
First published on BankersOnline.com 9/5/11
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