Charging Fees To Cash Government Checks

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Question:

Our practice is to charge a small fee to cash checks from non-customers. Is it permissible to do so for "Government checks", for example, Social Security checks? Specifically, is a check from welfare considered a "government check" and can a fee be charged for cashing it?

Answer:

There is no federal law that requires you to cash state, federal or local government checks. One was proposed several years ago and failed to pass, but even it would have allowed your institution to require identification and charge a "reasonable" fee. Any law requiring you to cash a government check or limiting any fee you could charge would be at the state level. For example, some state laws require banks holding state deposits to cash checks drawn on their state government. Others may have requirements of their own.

Please consider re-posting your question in the State Specific forum of Bankers Threads and identifying your state. You may get someone who can answer your question or, even better, provide you with a citation.

First published on BankersOnline.com 5/06/02