One of our tellers recently brought a check into my office to see if it was OK to cash it. The check was a dividend check, less than $100 drawn on an account at a major US bank. The reason she asked was that on the check there is the following: "This check may not be cashed at a check cashing agency or money service business". I have never seen this on a check before and am wondering if anyone else has run across checks with this verbiage.

Haven't seen that one before.

My creative imagination thinks maybe there is some desire to not have dividend proceeds diluted by fees...

But honestly I just dreamed that up.

Maybe others will chime in.

I think it probably has to do with the large number of instances with mobile deposit where the payee deposits through their phone and then goes to a check cashing agency and cashes the check. FYI, the first time one of our customers processes an item twice, their mobile deposit is turned off).

Intriguing. I've never heard of such a thing and doubt that it is anything more than an unenforceable "legend" that's intended to make people believe it cannot be cashed at those places. Why the drawer might want that is beyond me, but I'm pretty cynical so maybe I'll figure it out later.

I did find a sort of a personal blog from an individual, apparently unbankable, who was railing against the problems it caused him, so I don't think yours was a unique experience. His check was from a mutual fund.

Doesn't really answer your question, but someone did post a blog about a check with this same clause on it.

http://theamateurconsumer.com/the-under-banked/

Per the blog, when he called the issuer, they only told him it was their policy. No real explanation.

If you are a bank or credit union, the clause wouldn't apply to you. Other than what the blog poster went through, I don't know that the issuer can really know who is accepting the check for deposit/cashing (kind of like checking for endorsements on all items or checking for "2 signatures required").

Ken, when I was trying to research this I came across the same blog. This check appears to also be from a mutual fund, maybe it is something common in that industry??? I am glad that it's not just me that thinks this is odd.

There's also the potential the issuer has been burned more than once by phony stop-payment/reissue scams in which both the original check and the replacement are cashed, and the issuer is stuck having to pay both. The legend would be moot if the check is cashed or deposited at a bank, and I doubt it could be enforced against a check casher that takes the check (since it wouldn't get caught). But it might be used as a defense if one of those types of businesses received such a check back unpaid and tried to enforce the check against the issuer.