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Stop Payment on Check Processed for Wrong Amount

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Question: 
A customer placed a stop pay on a check for $1,600. The bank first processed the deposit as $16.00 so our system didn't stop it and the customer didn't realize it until several weeks later. I have looked everywhere and can't find any case similar to this. Can we return it and if so, for what reason, additional paperwork is needed?
Answer: 

You can't return it because it's past the midnight deadline for returns. Since you have a stop payment on file, the check is still subject to that stop payment, and, if the depositary bank requests an adjustment, you should refuse (the depositary bank bears the responsibility for its encoding of the amount), and you have no authority to charge your customer for the difference.

Your bank should reimburse your customer for the $16 and the stop payment cost, but leave the stop payment order on your books.

First published on 02/09/2020

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