How long does a payee bank have to return a check to the BOFD for reason: Refer To maker?

Is it midnight of the banking day following receipt of the check for payment or does the FI have 3-years like other returned checks such as forged checks, etc?

Any return of a check needs to be completed by the midnight deadline. Anything longer than that isn't a return; it's a warranty claim.

And for whatever you think it's worth: "Refer to Maker" should be avoided as a return reason. It tells the depositary bank nothing of the reason for return.

Follow-up question?

Do all banks have to utilize EARNS and send notifications for returns in amounts of $2500 or greater or is it optional?

The use of EARNS is optional. The notice is not. But my sense is that a number of banks have decided not to provide the notice on the theory that the actual return should arrive at the depositary bank by the 4 p.m. second day deadline. And, I imagine, they look at the penalty (losses actually caused by the delay) as minimal.

I am not fostering the adoption of such a perspective. The rule is there; it ought to be followed.

That said, one of the questions raised in the Fed's most recent proposal to overhaul Reg CC was whether the notification ought to be retained as a requirement.

John mentioned that the revision of Reg CC might eliminate the requirement of a large dollar ($2500) return item notice. They also sought comment on whether "Refer to Maker" should be allowed as a reason for return.

Personal opinion, strongly held: I think "refer to maker" is dishonest on its face. I would protest anything returned for that reason as a late return...

Bump- we received two checks back from a bank "Refer to Maker" we suspected they were counterfeit and the bank actually has an alert and has a copy of the counterfeit on the website and clearly they knew these Cashier's checks with their name on it are counterfeit. Do we as the depositing bank have any recourse with this bank who clearly knew they were counterfeit?

WestKerryGirl- were the returns timely?

If the returns were made within the issuer's midnight deadline, you hold the bag. If the issuing bank missed the midnight deadline, the bag should be returned to the issuing bank as an untimely return.

This sort of situation might be one of the rare times that "Refer to Maker" can actually be helpful. The returning bank is suggesting you contact it about the return. However, my comments about timely return just above aren't affected by this aside.

Personally, I really like the drawee bank's spunk. By saying "refer to maker" they're saying "Call us!"

I would oblige them.

To be constructive: They should have just returned the items with a proper description of "fraudulent" or "counterfeit" so you would have actual notice of the problem.

My assumption is that they really don't know what "refer to maker" means.

Ken, we can only use the return reasons indicated by the fed on our returns and I don't know why, but "deceased" and "counterfeit" aren't among them. The closest description would be "altered/fictitious" or "signature irregular" or "refer to maker"

We use "refer to maker" as the default reason on positive pay return items where the customer did not decision the item to pay (unless there is a stop on the check - then we would return for stop payment). This way the payee goes back to the maker to find out why their check was returned.

Understood, you are limited to the choices the machine gives you.

Thanks everyone- As a faithful follower of BOL I was looking at this comment by Guru John Burnett Circa 20013-Answer by John Burnett:
"Refer to maker" is tantamount to saying "We want to return this item but we can't tell you why." If the check is actually NSF or forged or stopped, putting "refer to maker" on the check as the reason for return could get the paying bank in hot water. The payee deserves to know why a check is not paid, and could argue that the lack of the correct reason caused the payee a loss.

"Refer to maker" does not endow a check with any sort of protection from an allegation of late return, either. In the cases you mention, you think the other bank is returning items late based on an allegation of kiting. Your bank should refuse these as late returns since the drawee bank doesn't get a "pass" on the midnight deadline just because they think a kite is flying. In these cases "refer to maker" seems to be an obvious ruse to hide the true reason for bouncing the checks -- when the true reason would not be permitted a late return.

In general, delayed returns are permitted only for things like forged endorsements and alterations, since these are not things that the drawee is presumed to know at the time of payment.

The checks I am referring to were not late returns.

Circa 2003

I don't think there is such as thing as a permitted delayed return. If you have an altered check or forged endorsement issue they are usually handled as Without Entry claims to the depositing bank along with the appropriate affidavits/documentation and not as a return.