When banks refuse to honor checks!
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.