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XMFSinchiruna (27.59)

When banks refuse to honor checks!

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54

July 10, 2009 – Comments (30) | RELATED TICKERS: BAC , JPM

Last week, I was standing in line at a Bank of America branch, and observed with consternation an exchange between a man trying to cash his paycheck and the bank teller. The man was latino, creating somewhat of a language barrier, but that wasn't the problem. Being fluent in Spanish, I offered my services in translating for him, and was astonished to find that the teller wished me to explain that an $8 charge was being levied against his check for the right to cash it.

Now mind you, the check was written on a Bank of America account!

The man possessed a valid driver's license as positive picture I.D., and submitted to their requirement of a fingerprint without objection.

The check was for an amount less than $200, making the hefty charge even more insane.

After translating, I took it upon myself to question the teller about this policy, and she was notably embarrassed by the policy and became apologetic. "It's supposed to encourage people to open accounts with us", she said. The teller also indicated she was considering writing a letter to corporate headquarters to question the injustice of the policy.

Afterwards, I spoke with the gentleman outside the branch about his experience, and he remained confused and frustrated ... asking: "how am I supposed to make it when even the bank is taxing my income?"

Anyone chomping at the bit to defend the bank's policy on the basis of fraud protection, don't bother ... the teller indicated the policy was intended to bolster new deposit accounts. After all, the banks are desperate for our cash so they can leverage it up to 10:1 again and try to dig their way out of the massive derivatives pit.

The bottom line is: checks are supposed to be contracts for payment, and banks refusing to honor checks drawn on their accounts, or agreeing to do so only with a usurous fee, are breaching that contract. Any Fools encountering similar behavior by their banks are encouraged to share their experiences here, and to write to the bank expressing their dissatisfaction.

Clearly, in this age of increasing reliance upon digital financial transactions, checks are quickly losing their status as reliable and convenient instruments of payment. This is wrong, and the banks just keep piling insult onto injury in the wake of this financial mess they've created.

Here is a nice piece of investigative reporting by a concerned citizen in Portland Oregon

CHASE bank refuses to honor checks written on its bank (update 2)

Updated- Darcy Wilmot the Media Relations Representative for the Pacific North West has since returned the call made to CHASE requesting comment. She is looking into the matter

A funny thing happened at the bank on Wednesday (June 8th). CHASE bank in Newberg Oregon refused to honor two corporate checks totaling over 6 thousand dollars. Despite the fact that the funds were available from the account holder in question, CHASE refused to honor the checks and cash them. Upon demanding that Chase honor the checks written on its bank, I was told that if I wanted the funds, that I would have to open a business account with them in which case they would hold the checks until they cleared the account they were written on, in the same bank, which “would not happen immediately”.

This reporter was told that CHASE had a policy which stated they would not cash checks written on their bank, but they could not hand me anything in writing at all. They could not give a date as to when this policy began. In fact, less than a week earlier, I cashed a business check for over 2 thousand dollars with no problems at all. CHASE appears to be following an arbitrary banking policy which they cannot back in writing.

For anyone in the financial world, this says one thing. CHASE isn’t honoring its checks.

I was told that because it was a corporation to corporation transaction ( I am the owner of the second corporation and had everything including the Assumed Business name Registration, the State Corporate documentation, the Tax Id number, the Tax Payment coupon booklet, as well as my personal Passport, credit card and Oregon Drivers license) they would not cash a business to business check.

This is not good folks.

Interestingly enough, they were completely uninterested in a business documentation I had, but did require my index fingerprint on the checks they then refused to cash. I asked for Bank checks, or a cashier’s checks for the amounts of the checks I was attempting to cash, I was again told by Jessica Young, the Assistant Financial Center Manager in the Newberg Oregon Branch, that if I wanted bank checks I had to open a CHASE account, and that the funds would not be available immediately, and that they would not give a Cashier’s check until the funds had cleared from the originating account. Which if it is at all necessary to reiterate, was an account of their own, they could see that the funds were available. So once again, CHASE refused to honor checks written on its bank. I was then given the name of the Media relations person for CHASE, along with a booklet titled “Account Rules and Regulations”, which makes no mention whatsoever of any policy of not cashing checks on its bank. So quite literally, if you are a small business owner, and get a check from a client or customer written on CHASE bank, don’t expect to be able to go to CHASE bank and cash the check written to your business.

CHASE isn’t honoring and cashing them.

This should be a wakeup call to all small Business owners, and to anyone in the financial world, it is not a good thing when banks start refusing to cash checks on their banks. It is more or less stating that they don’t have the money to cash them. That is a serious issue, and one that all Americans should start taking heed of. The first step in widespread banking failures is the banks refusing to cash checks written on their accounts. CHASE bank is now doing just that, and with no written policy for doing so, no statement of when this policy began, and it should be a red flag to everyone.

JPMorgan CHASE & Co. Reported on June 17th that it had repaid the 25 Billion in Preferred Stock Investment it accepted and received in TARP funds. It is astonishing that CHASE isn't honoring simple small Business Checks for just a few thousand dollars.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Update 2- (7-9-2009 12:54 PM)

In the interest of fairness and accuracy in reporting, I am including JP Morgan Chase's point of view:

Sondra Matthews from JP Morgan has responded to this article with the following information. JP Morgan Chase follows an internal policy which is based on preventing fraud and is specifically geared to protecting their account holders and the bank itself. Ms. Matthews explains that there is an upwards dollar limit on the checks it will cash for non-customers in its branches and this amount is completely risk based, and designed to protect its account holders.

 

 

30 Comments – Post Your Own

#1) On July 10, 2009 at 8:54 AM, XMFSinchiruna (27.59) wrote:

Here is the link to the Oregon article.

To any CAPS-related staff, web links within the bodies of blogposts are consistently being lost over the past few days.

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#2) On July 10, 2009 at 9:07 AM, binve (< 20) wrote:

Sinch, man that is a horrible development. Thank you for the link! I also remember you were the first one (that I saw at least) to post the video about the bank seizing safety-deposit boxes without due notification. This is just another link in the chain when it comes to banks.

Also I hear you about the links. My latest blog post had about 20 in the main body and they all vanished :(. But TMFJakes's latest blog post recognizes the issue and pre-emptively apologizes for it.

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#3) On July 10, 2009 at 9:17 AM, outoffocus (23.35) wrote:

That is scary.  Just further proof of the smoke and mirrors being put up by these financial institutions.

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#4) On July 10, 2009 at 9:21 AM, catoismymotor (< 20) wrote:

This would be a great time for a bank to attract business by advertising that they would never engage in this sort of behavior.

 

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#5) On July 10, 2009 at 9:43 AM, lemoneater (77.43) wrote:

Unreal, but I believe you. Once about a year and a half ago, my husband got the run around at having his paycheck cashed by a different branch of the same bank which issued it (Disclosure: he doesn't make a 6 figure income so this should not have been a cash flow issue for the bank!). So he drove the other side of town to the exact physical location which issued the check and a regular teller was not able to help him without getting the go ahead from a superior. Nothing like working for your paycheck!

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#6) On July 10, 2009 at 10:01 AM, GNUBEE (25.06) wrote:

Sinch,

Thanks. I have come to believe that bank tellers do not always recieve the best training. This after I was asked for identification to deposit a check. (my check from another bank).

Far as the hold till it clears, I always thought that was just another way to get a few overnights on interest, not fraud deterence. We are talking about banks mind you.

Good work doing the right thing and helping that guy out

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#7) On July 10, 2009 at 10:08 AM, 4everlost (29.63) wrote:

I had a customer pay me $500 using the Chase online bill payment service.  This means the funds had already been taken from the payer's account (otherwise they would not have printed and mailed the check).  I went to a Chase branch and they would not cash it without charging me a fee or opening a new account.  I was astounded.  The check was written by Chase, not my customer!  How can they not honor a check they wrote when I present it at one of their branches?!  It is my hope that these type of policies have some sort of negative effect on their business to the point where they realize they are hurting themselves.

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#8) On July 10, 2009 at 10:10 AM, wrparks (62.16) wrote:

This is why I use credit unions......

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#9) On July 10, 2009 at 10:17 AM, XMFSinchiruna (27.59) wrote:

4everlost

Thanks for sharing your experience! I hope more Fools will come forward with similar stories, and maybe I can work it into an article to exert slightly more pressure on them to re-evaluate these policies.

My general observations apply regarding the looming increase in importance of customer service as this depression plays out. The following are my comments to an article by fellow Fool Alyce Lomax:

I believe that "consumers" writ large can use recent events as a catalyst to demand superior service and responsiveness from the corporations reliant upon their revenue. I too had my share of unpleasant customer service experiences over the holiday weekend ... with "utility" providers supplying the most egregious examples.

In fact, while we're at it, how about having something of an awakening as a populace to appreciate the willing role we play (myself included) as consuming pawns. When our demand for products and services was approaching peak levels before the markets turned, people were denied ever greater levels of customer service in favor of increasingly automated approaches where often human interaction is indeed never offered. Now that the tide of demand has shifted into a decidedly more frugal mode, people have an opportunity to demand resumption of at least basic courtesy in these streamlined processes ... or at best a wholesale return to personal customer service.

I believe that customer service will increase in importance as a determinant of company survivability during subsequent phases of this ongoing depressionary event. Many people are experiencing financial strain, and won't tolerate the insult to injury added by low-quality corporate responsiveness. For that matter, how about corporations stop referring to us as "consumers", and offering a label with a touch more human dignity. Words sometimes matter.

Fellow Fool, your article is a bold example of the kind of "consumer" response that will lead companies to adapt to the post-collapse economy by revamping customer service. I commend you for raising your eloquent voice, and encourage Fools to follow your lead wherever your receive unsatisfactory customer service or practices.

 

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#10) On July 10, 2009 at 10:27 AM, rofgile (99.32) wrote:

Good post - that is crazy that Bank of America is not cashing its own checks..

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#11) On July 10, 2009 at 10:30 AM, Dividends4ever (< 20) wrote:

It is all part the of the gouging of Americans that is coming and going to get worse.

Wait until we start getting bills in the mail charging you for breathing the air.

Scary!!

 

www.compdivplan.com 

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#12) On July 10, 2009 at 10:56 AM, jstegma (29.47) wrote:

Very interesting post.  It just shows how banks have gotten such an attitude lately. 

If you can't cash a check at the bank it is written on, then where can you cash it? 

This is just pure extortion.  The government should prosecute these banks under RICO statutes.

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#13) On July 10, 2009 at 10:59 AM, Jimmy2008 (< 20) wrote:

I am Canadian (living in US) and visited Canada 4 months ago. I had had a line of credit account with TD Canada for about 9 years and my checking account with them was closed by my request years ago. When I tried to cash a check there, I was asked to open a checking account first. The reason: anti-terrorism. After discussion, I could deposit the check into my Line of Credit account.

Many Canadian banks have similar policy. They want to avoid any potential trouble related to anti-terrorism and anti-money laundry.

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#14) On July 10, 2009 at 10:59 AM, Jimmy2008 (< 20) wrote:

I am Canadian (living in US) and visited Canada 4 months ago. I had had a line of credit account with TD Canada for about 9 years and my checking account with them was closed by my request years ago. When I tried to cash a check there, I was asked to open a checking account first. The reason: anti-terrorism. After discussion, I could deposit the check into my Line of Credit account.

Many Canadian banks have similar policy. They want to avoid any potential trouble related to anti-terrorism and anti-money laundry.

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#15) On July 10, 2009 at 11:30 AM, gonelong (35.49) wrote:

My local credit union recently paid out a $3M special dividend to it's members.  People there are intested in speaking with you and helping you out.  7% intestest for the first $500 on a savings account, etc, etc, etc, etc, etc.  Credit union, find one, join it.

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#16) On July 10, 2009 at 11:36 AM, TMFLomax (52.14) wrote:

Great post! But good grief, that's really something, and it's not good. (And yeah, yet another example of shoddy customer service/treatment discussed recently...)

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#17) On July 10, 2009 at 12:27 PM, RonChapmanJr (56.93) wrote:

Everyone go put their money in a Credit Union and let's shut down these big banks ourselves.  Even the govt wouldn't be able to prop up banks that no one used.

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#18) On July 10, 2009 at 12:43 PM, tonylogan1 (28.28) wrote:

hundreds and perhaps over a thousand small banks will be closed by the time this "crisis" is over.

The big banks will only get worse in their abuses of the little guy when more competition is gone.

Eventually people will be so fed up, that it will be profitable to open new small banks that treat people well. And the cycle will continue until the big banks crush the little guys again.

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#19) On July 10, 2009 at 3:41 PM, Merlyn144 (29.34) wrote:

Sinch, I work at a bank in Canada.  Our policy is to charge $5 for non-customers who cash cheques.  Part of the reason is what the Bank of America teller told you: it is a means of encouraging people to open accounts at our bank.

There's another reason why some (maybe all) Canadian banks opearte this way.  Usually a customer will take a cheque to the bank of which the cheque has been issued because they don't want a one-week hold placed on their cheque should they make a deposit at their own bank.  This usually applies to people with bad credit history. 

I'm not big on this bank policy, myself, but I can understand why the banks have operated in this fashion.  This has been a policy as long as I have worked at the bank, as well; it wasn't started due to the economic downturn.

 

Re: the Chase Bank incident.  We will not cash cheques made out to businesses, either, for the simple reason that we cannot confirm whether or not the person cashing the cheque has the authority to do so.  If the cheque is made out to 'John Smith' we will only cash it if John Smith can provide the identification to verify his identity.  If the cheque is made out to 'ABC Company' there is nothing we can do to confirm that the person cashing the cheque over the counter is even a member of the company, let alone in a position to cash the cheque.  Even if the person gave us a phone number, we would not know if the number linked to the company or to some random house belonging to the cheque casher's friend.  Again, this has been a longstanding policy amongst the banking community and was not initiated due to the economic downturn.

This policy I agree with 100%.  Businesses should be depositing cheques into their own accounts, or having the issuer's bank certify the cheque or change it into a demand draft.

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#20) On July 10, 2009 at 3:44 PM, Merlyn144 (29.34) wrote:

Small edit to my post:

Re: the last sentence:

Businesses should be depositing certified cheques and demand drafts to their own account, as well.  We wouldn't cash those, either, for the same reasons in the paragraph above.

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#21) On July 12, 2009 at 1:00 PM, XMFSinchiruna (27.59) wrote:

In another edition of bankers' news of the wierd, Wells Fargo is suing itself:

http://www.foxbusiness.com/story/markets/al-lewis-wells-fargo-bank-sues/

You can't expect a bank that is dumb enough to sue itself to know why it is suing itself.

Yet I could not resist asking Wells Fargo Bank NA why it filed a civil complaint against itself in a mortgage foreclosure case in Hillsborough County, Fla.

"Due to state foreclosure laws, lenders are obligated to name and notify subordinate lien holders," said Wells Fargo spokesman Kevin Waetke.

Being a taxpayer-subsidized, too-big-to-fail institution, it's possible that one of the few ways for Wells Fargo & Co. (WFC: 22.91, -0.34, -1.46%) to know what it is doing is to notify itself with a court filing.

In this particular case, Wells Fargo holds the first and second mortgages on a condominium, according to Sarasota, Fla., attorney Dan McKillop, who represents the condo owner.

As holder of the first, Wells Fargo is suing all other lien holders, including the holder of the second, which is itself.

"The primary reason is to clear title and ownership interest in a property to prepare it for sale," Waetke said in an email exchange. "So it really is not Wells Fargo vs. Wells Fargo."

Yet court documents clearly label "Wells Fargo Bank NA" as the plaintiff and "Wells Fargo Bank NA" as a defendant.

Wells Fargo hired Florida Default Law Group., P.L., of Tampa, Fla., to file the lawsuit against itself.

And then Wells Fargo hired another Tampa law firm -- Kass, Shuler, Solomon, Spector, Foyle & Singer P.A. -- to defend itself against its own lawsuit, according to court documents.

Wells Fargo's defense lawyers even filed an answer to their client's own complaint.

"Defendant admits that it is the owner and holder of a mortgage encumbering the subject real property," the answer reads. "All other allegations of the complaint are denied."

This is even dumber than the lending practices that led to this foreclosure mess, yet this is what the court record says. I learned about this from "The Consumer Warning Network" Web site, which posted an article by Angie Moreschi titled, "Have The Banks Gone Crazy?"

"We've apparently reached the perfect storm for complete and utter idiocy by some banks trying to foreclose on homes," Moreschi wrote.

McKillop, the condo owner's attorney, told me he thinks Wells Fargo doesn't know what it's doing, and that its lawyers figure it is all billable hours to them.

"You can't sue yourself," McKillop said. "It's just so ridiculous. .. It's a waste of paper. It's a bastardization of the legal process."

Wells Fargo's two law firms didn't return messages to explain their filings.

The condo owner is belly up and hired McKillop to pursue a "friendly foreclosure," attempting to escape any lingering liabilities after the foreclosure sale.

"It was a property they thought they were buying as a good investment as a lot of people did back in 2005 and 2006," McKillop said. "All we want to do now is get this property taken care of as fast and as easily as possible for all parties."

Rather than suing itself -- a stunt that was never even attempted on the MTV show "Jackass" -- wouldn't it be easier for Wells Fargo to release one of the liens to itself? Or pursue some other internal accounting strategy rather than tie up the court with nonsense?

"This is just folks cranking out paperwork without conscious thought," said Anthony Sabino, a law professor at St. John's School of Law in New York City.

Sabino added that it is possibly more confirmation of the old saw that a lawyer is one who can speak from both sides of the mouth.

Still trying to comprehend this legal lunacy, I called the Florida Bar, which put me in touch with Florida mortgage foreclosure lawyers. One of them, Tampa attorney Kristofer Fernandez, said he's seen several cases where a large bank has sued itself for foreclosure as the holder of both first and second mortgages.

"Four or five years ago, you would have never seen this," Fernandez said. "Now, it's very common."

In the final years of the housing boom, banks were lending to homeowners with no money down. To do this, they often made 80/20 loans, giving homeowners an 80% first mortgage and a 20% second mortgage.

Now, it seems these moronic mortgages require moronic foreclosures.

Perhaps this strategy may speed up a summary judgment. Or maybe it preserves the position of the second lien holder so it is next in line to collect surplus funds after the first lien is satisfied, Fernandez said.

But fat chance of surplus proceeds in the Florida condo foreclosure market these days.

It takes some pretty shameless lawyers and a rich culture of corporate stupidity for a company to sue itself. I hope Wells Fargo loses this case and ends up having to drag itself all the way to the Supreme Court.

 

 

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#22) On July 12, 2009 at 1:37 PM, Mary953 (72.90) wrote:

Chris, If you have not done so already, PLEASE turn the comment above into a separate blog!   I would rec it just for the opportunity to rec the last line -

" I hope Wells Fargo loses this case and ends up having to drag itself all the way to the Supreme Court."

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#23) On July 12, 2009 at 1:52 PM, IIcx (< 20) wrote:

Great post and Rec TMFSinchiruna!!!

Please consider the issue the bankers were likely embarrassed to mention.

Thanks to the Internet, identity theft is off the charts and includes such amazing frauds as walking into a local branch bank and taking out a home loan in someone else's name.

Talk about stupid bank managers or was the documentation so convincing that the only recourse the bank has is to hold transactions and loans until resolution? The idea is to expose 100% of the fraud before it occurs.

I completely agree, its outrageous that a bank is now unwilling to cover payroll checks but these are more then unusual times and IMHO it has more to do with fraud then available cash.

Perhaps the bank should encourage corporate accounts to share HR info like picture IDs and socials and make opening an account easier for corp. employees? Big Brother stuff as far as I'm concerned but it makes more sense then to turn away a man who needs $200 for his family?

I think there's more to this story then encouraging banking account creation.

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#24) On July 12, 2009 at 2:05 PM, IIcx (< 20) wrote:

PS. I did read the blog comment "Anyone chomping at the bit to defend the bank's policy on the basis of fraud protection, don't bother ... "

Sorry, it's the likely true cause and I suspect tellers are instructed to never mention this.

Let's face it, would you bank with a company that gives home loans to someone else in your name?

Best, IIx 

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#25) On July 13, 2009 at 8:35 PM, silverminer (30.75) wrote:

IIcx

No sooner than I would continue banking with an institution that tried to charge me a fee for cashing a check drawn on their account.

Sorry, but with the federal interventions, and guarantees both real and implicit, the semi-nationalized banks already have an enormous level of fraud protection built into the system by virtue of that relationship. I can not endorse that rationalization. 

The teller did not appear to be repeating a memorized one-liner, but rather divulging an embarrassing admission. As I said, she expressed your own dissatisfaction with the policy on that basis.

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#26) On July 13, 2009 at 8:35 PM, silverminer (30.75) wrote:

[her own] :)

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#27) On July 16, 2009 at 7:32 PM, XMFSinchiruna (27.59) wrote:

Here's an interesting one:

Bank of America Bans Customer for life

 

 

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#28) On July 16, 2009 at 7:33 PM, XMFSinchiruna (27.59) wrote:

That may have been the wrong link: try this.

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#29) On January 18, 2014 at 10:46 PM, mcarmel62 (< 20) wrote:

 How about going into your OWN bank, cashing a check written to you on that same bank and they try to hold the money against YOUR acct???????????????????????????

THIS CANNOT BE LEGAL!!!!!!!!!! TD Bank Cust service tried to tell me it was  that the computer recognzes me as a customer and it protects me from a  non TD customer fee!!!!!!!!!!!!!!

No WAY  they are holding our money hostage folks! And  no one  is upholding the Bank policy in order here! If this holds true,  much longer,  checks are just  not honored as legal tender anymore,  if they are breaking laws!  Oh they site the law quickly if someone were to  bounce a check though!! Very quickly indeed! BS Folks!!!!!! And we have to live with this ?

It is a mere display of  employees, who find a computer Glitch  and they do  not feel like doing the transaction separately, so the feel more validated to cause a problem that does not exist!!!!!

And you leave the bank  without the moneys written to you!

  

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#30) On January 18, 2014 at 10:49 PM, mcarmel62 (< 20) wrote:

It is sickening, that American people give thier rights up too easily!!! This one  really  is the topper TD bank!!!! And when I said, Ok , let me pay the fee!!! they still refused to do it! LOL LOL LOL

FOOLS! 

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