Question & Answer

Question: We are receiving an increasing number of payment vouchers generated by telemarketing firms. They are presented as "checks" authorized by the customer when making a purchase from the telemarketing firm. These are cumbersome to process. Is there any way we can refuse to accept these?

Answer: If the draft or payment voucher presented by the telemarketing company contains the elements of a negotiable instrument, the bank must process them in the same way they process checks The instrument must have an amount certain, a drawer, a drawee, a payee, and a date.

When the customer provides their account number and authorizes payment in this manner, they are authorizing the telemarketing firm to generate a check. When that check is presented to the bank, it must be processed consistently with the check clearing requirements in the Uniform Commercial Code.

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 20, 12/96