We have a customer who has deposited a check into his account. We placed a hold on the check. Checks were presented against the held (uncollected) funds. We are going to pay the items, can we charge him a fee?

You will have to re-imburse any fee if the hold caused the fee and they would have had enough to cover the checks had no hold been placed.

Our system does the charge and we reverse it once the hold comes off, assuming the checks would have cleared.

If the depositor received notice of the hold at the time of deposit, then you may charge a fee. If notice was provided after the fact, then the customer is not liable for any NSF/Uncollected fees incurred as a result of the hold.

Refund needed only if they didn't receive the notice at time of deposit.

Thanks for your help. I hate to be picky, do you have any cites on this?

229.16(c)

229-16(c)(3) from the BOL Reg CC page:

(3) Overdraft and returned check fees. A depositary bank that extends the time when funds will be available for withdrawal on a case- by-case basis and does not furnish the depositor with written notice at the time of deposit shall not assess any fees for any subsequent overdrafts (including use of a line of credit) or return of checks or other debits to the account, if--
(i) The overdraft or return of the check or other debit would not have occurred except for the fact that the deposited funds were delayed under paragraph (c)(1) of this section; and
(ii) The deposited check was paid by the paying bank. Notwithstanding the foregoing, the depositary bank may assess an overdraft or returned check fee if it includes a notice concerning overdraft and returned check fees with the notice required in paragraph (c)(2) of this section and, when required, refunds any such fees upon the request of the customer. The notice must state that the customer may be entitled to a refund of overdraft or returned check fees that are assessed if the check subject to the delay is paid and how to obtain a refund.

Thanks much