Tell Customer About Exception Hold Before Mail?

If the decision to place a hold is made at the time of deposit, you are required to provide the notice at the time of deposit rather than dropping it in the mail later on. Reg CC 229.13(g)(1)(ii)(A)Timing of notice. (A) The notice shall be provided to the depositor at the time of the deposit, unless the deposit is not made in person to an employee of the depositary bank, or, if the facts upon which a determination to invoke one of the exceptions in paragraphs (b) through (f) of this section to delay a deposit only become known to the depositary bank after the time of the deposit. In the event that the decision to place a hold takes place after the customer has left the bank, then mailing a notice is required as outlined in the conclusion to the same paragraph of the regulation: If the notice is not given at the time of the deposit, the depositary bank shall mail or deliver the notice to the customer as soon as practicable, but no later than the first business day following the day the facts become known to the depositary bank, or the deposit is made, whichever is later.Let's suppose, though, that you didn't decide to place the hold until after the depositor had left the bank. For example, suppose that you learn that the paying bank is returning a check from the deposit unpaid. Obviously, you will need to send the depositor the notice, as the regulation requires. But do you need to do more, such as making a telephone call or sending an email to notify your depositor sooner? The answer is, no, you aren't required to provide notice sooner than placing a written notice in the mail the next business day. But there is nothing to prohibit you from providing, in addition to the required written notice, a courtesy call that may prevent your customer from issuing payments in reliance on what he had believed were available funds.

First published on BankersOnline.com 4/1/13; revised 4/9/13