Question & Answer

Question: I heard you say in one of your seminars that we are no longer required to restrict our customers to endorsing on the 1 1/2 inches on the lead end on the back of a check. All checks are being printed telling people to endorse there. What's the deal?

Answer: When the recommendation first came out from the Federal Reserve on Regulation CC, it was that a customer's endorsement be restricted to the area you refer to, and none other on the back of the check. The second area was for the depository bank and the rest of the check for subsequent bank information. Needless to say, retailers that stamp the back of the check with a box to fill in with information about your address, driver's license number, mother's maiden name, etc. were a little upset. So upset that over 10,000 of them contacted the Federal Reserve. Fed yielded to the pressure, and amended the proposed requirement to "suggesting" the endorsement be made in the first 1 1/2 inches-but as long as the transit number of the depositary financial institution could be read on the back of the check, it made no difference where the check was endorsed. They also "suggested" that the second area or middle area of the check be reserved for that nine digit transit number. There is no penalty for endorsing a check other than on the first 1 1/2 inches.

By the time Fed came out with their amendment, (which was before the effective date of Reg CC) the check producing companies had retooled to reflect the original proposal. They have not changed back.

Copyright © 1993 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 4, No. 6, 12/93