We are considering implementing the use of an 'endrosement guaranteed' stamp for our business account holders The purpose would be to facilitate the in person negotiation of checks payable to the business in situations where the check has been dishonored or situations where we are going to delay availability of the funds to the business payee. The goal is to make it easier for business account holders to exchange these checks for cashier's checks.

I recognize that this is an old practice, and that many larger financial institutions have ceased to offer this option for their account holders.I am interested to know if others currently offer this alternative and what guidelines on usage, if any, do you have in place for your employees? I am also interested to hear what others perceive as the significant risk factors/drawbacks to offering this service?

Thank you in advance for your responses!

Of what value is the stamp as you already warranty the endorsement?

These questions really should be discussed with your legal counsel.

There is a reason this is an "old practice". There is nothing in it for the bank unless you are charging a pretty nice fee.

Consider the wisdom in adopting a practice that is both ancient and on the wane...

Moreover, the practice was actually used with items that had never been through the clearing system, not return items. (As rlcarey points out, if it's a return item your bank already guaranteed the payee's endorsement once.)

Many drawee banks that no longer certify their customer's checks are smart enough to know they are under no obligation to replace their customer's check with an official check. They simply refuse. (If they are being asked to swap for an IRD, I can imagine they would be even more adamant.) The payee (who has been assured by his own bank that the drawee bank will trade items) will ultimately realize he has been sent on a fool's errand.

"Swapping checks" is a ridiculous practice for any bank. Your bank should not be suggesting that it's the norm. If your customer wants an official check from his customer's bank that's what he needs to ask for up front.

truer words have never been spoken...err...written