We currently have an upper manager that would like to place holds on Credit Card Checks due to the volume we receive that are uncollectible. However, in a recent training provided by BankersOnline, it was noted that a "reasonable doubt hold" would not suffice. What types of holds are acceptable for a credit card check. I greatly appreciate any help you may be able to offer. And if there is a specific reference we could refer to, to back our findings for upper management, that would also be great.

Thank you and Merry Christmas!!

Why would reasonable doubt hold not apply...if you have had a consistent experience with these coming back bad, I would say you have satisfied this clause.

We know that these checks bounce back for the slightest reasons: the check is expired, over the funds limit, endorsement is not a perfect match, it's Tuesday, there was a full moon the night before, becuse Christmas will fall on a Thursday in 2008...take your pick. And often you are not able to verify if the check will be honored or not!

I think there is plenty of reason and consistent past history to justify an extended hold.

You cannot place a reasonable doubt hold based on a class of checks. From the reg:

(e) Reasonable cause to doubt collectibility. —(1) In general. Sections 229.10(c) and 229.12 do not apply to a check deposited in an account at a depositary bank if the depositary bank has reasonable cause to believe that the check is uncollectible from the paying bank. Reasonable cause to believe a check is uncollectible requires the existence of facts that would cause a well-grounded belief in the mind of a reasonable person. Such belief shall not be based on the fact that the check is of a particular class or is deposited by a particular class of persons. The reason for the bank's belief that the check is uncollectible shall be included in the notice required under paragraph (g) of this section.

If you have other reasons to doubt the collectibility besides the fact that it is a credit card check, then you can use that reason.

Send them for collection is the best advice I've heard on this subject.

At a large bank based out of the Twin Cities, we often put full holds on these items, because we were not able to verfiry the legitimacy of the item. We either we not able to contact the company, or they would not verify for us, and thus we would put on an extended hold under this reason specifically.

While I won't dispute what your former very large bank employer did, nor will I dispute undocumented statements from unnamed examiners that would allow for such a policy, there is simply no justification in the regulation for such action.

Lack of information is not the equivalent of having information or facts that would lead a reasonable person to doubt the collectibility of an item.

The only safe and incontestable strategy is to refuse the item for deposit and send it for collection.

How about a general case by case? Would that work?

A case by case hold is allowed on any item that's not next-day availability under Reg CC, but with credit card checks, they often take longer to be returned unpaid than regular checks. The hold has often expired when the depository bank receives the returned item.

There is nothing in Reg CC that would prohibit you from placing case-by-case holds on all credit card checks. A couple of caveats, though. First, as GuitarDude says, they are generally ineffective because the hold expires long before you learn that the check is not good. Second, if that is your policy, you need to make sure it is reflected in your written Funds Availability Policy.