Foreign checks posted in a consumer or business checking account are sent to another bank for exchange. They have notified us they are charging us $51 for each foreign item. Can we pass this fee to the customer and if so do we have to give them a 30 day notice. One of our customers receives a check from Canada each month. Can we charge them more than what we are being charged?

What does that mean; i.e. do you send the checks to another bank via the mail or through the clearing system? When does the customer get credit for the "deposit?"

In short, if the fee is not "in connection with the account" Regulation DD does not require that you disclose it or that you give advance notice of a change. Assuming that you do not give customers any sort of credit for your receipt of a non U.S. check intended for deposit, I would say any fee is not "in connection with the account."

We have an employee that delivers the checks to the other bank. The customers, at this time, are given immediate credit. So we would have to debit there account for the fee.

My suggestion would be that you begin crediting the customer account after your employee gets back to the bank with whatever type of payment you receive. Deposit the net amount then debit your bank's new "foreign check collection fee" from the account. Your current mechanism sounds like something that was set up as a personal accommodation in days gone by and it's only now becoming more apparent that it never was a good idea.

Your fee would be for collecting the check and, in my opinion, would be like a fee for a safe deposit box, sale of the official check etc. i.e.; it would not be in connection with the account.

Required by law or not, I suggest you give your customer advance notice of the change. My guess is that this "service" will no longer be sought.

Okay. We are changing our process not to give the immediate credit. We were notified yesterday that we will directly go thru the Federal Reserve to have it exchanged so the credit will be made after all the fees have been made through the exchange and we will credit the customers account at time we receive the balance. Thank you.