What if the MICR number doesn't match the fraction?

Question: My question is regarding the MICR (Magnetic Ink Character Recognition) number matching the fraction located on the check. One of our staff members came across a check where the MICR number does not match the fraction on the check. We called the financial institution and they verified that the MICR number is correct and the check should be fine.

Is there an exception to this rule? Can a check be legal if the MICR number and fraction on the check do not match?

Answer: The fraction is an important security feature, but it is not universally used. There is an excellent brochure on checks available online free from the Federal Reserve Financial Services. In it, they state "Fractional routing/transit number: The fraction on the top of the check should match the bank ID in the MICR line." They go on to say: "Forgers also print an incorrect fractional routing number to further delay presentment of the item and print a bank location on the check that is inconsistent with routing/transit and/or fractional routing numbers."

You can access the full brochure at: http://www.frbservices.org/checks/pdf/checkfraud.pdf

Unfortunately, with the mergers of many financial institutions, and the creation of many very small financial institutions, some of them are taking advantage of out-sourcing some banking services, and that is how we run into the problem you describe. A small credit union or bank may not issue its own checks, but will instead issue the checks against their account with the out-sourced service. So the bank or credit union name will appear on the item, sometimes along with its fraction, but the MICR number on the bottom is where the check will actually be presented for payment against the small bank's or credit union's account being held by the out-sourced servicer.

This practice complicates an otherwise easily understood principle of fraction matching the MICR line. It's safe to say that in almost all cases, they will match. In the instance where it does not match, a great deal of extra caution should be exercised.

Copyright © 2002 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 12, No. 9, 12/02