I have a question regarding stop payments. Can we require the customer to sign the stop payment form before we apply the stop payment? Or do we have to apply the stop payment from a verbal request? Some of our branch managers are wanting to make it a requirement that they sign it first. Can we do that?

UCC 4-403 (check your state's version) probably precludes the bank from requiring a signed request, but would permit you to let the stop payment lapse if it's not confirmed in writing in 14 days. (Of course, you would need to tell the customer at the time they submit the oral request.)

Look at your state's version of UCC section 4-403. If it mentions oral stop orders and doesn't say that they can be refused by the bank, I would consult the bank's attorney before imposing a requirement that stops be signed before being effective. That could be construed as messing with the depositor's right to stop payment, and a court might not think too highly of it if your customer were to sue you.

As for preauthorized debits FROM a consumer account (as defined in Regulation E), the customer has a right to an oral stop payment if it's received by the bank at least three days prior to the scheduled posting date. Banks cannot take away rights under Regulation E, so you'd have to honor an oral order for 14 days.

Thank you both very much. I found the answer to my question and it's no.

We are trying to implement software that is going to make it very hard for us to keep track of stop payment requests that were provided orally. Do stop payments HAVE to lapse afer 14 days without written confirmation? or is it simply the right of the financial institution that oral requests will lapse after 14 days without writing?

Unless you provide for an alteration to the provisions of the UCC in your deposit contract, you could run into a problem. I suggest you discuss your idea with counsel before doing anything.

Suppose that a customer calls and places a stop payment on his check. You tell the customer that you will send a written copy of the order and that he must return it to you. The customer then changes his mind and wants the check paid, so he decides not to sign the written stop order, and assumes that it will "drop off" at the end of two weeks. The check is presented on day 20, and you bounce it for stop payment.

Your customer, IMO, might have a case for wrongful dishonor under the UCC.

Your attorney can tell you how to avoid that risk. Ideas might include updating your deposit contract to provide for effective periods of 6 months (or longer) on oral and/or written stop orders. Perhaps your attorney would tell you to inform the calling customer that the stop order will be effective for six months and that he only needs to contact you to correct information (based on a confirmation you'll send, if that's what you'll do) or to cancel the stop order.

Excellent advice - the UCC establishes the minimum that you have to do (i.e. allow oral stops for at least 14 days); there's nothing that says you can't go beyond the minimum. But, as with so many things, the key is to be sure that everyone's on the same page. If you want oral stops to be good for six months (or a year or two), your documents and customer conversations should be clear about that. If you want oral stops to lapse if not confirmed in writing after 14 days, your communications should also be clear about that. IMO, the vast majority of disputes with customers occur because the customer wasn't educated about the service. Most of these disputes can be avoided with a little better communication.