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Noncashable Checks

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Question: 
I am a bank teller at a very large bank. I have noticed that some companies, Verizon, for example, as well as some insurance companies, issue checks to their customers that aren't cashable. These checks are only depositable. Our bank cashes checks for both customers and non-customers and I don't think it is fair to give someone the impression that they can cash their check, especially when they find out they can't after waiting up to 45 minutes in line.These checks look like any other check and nowhere does it say that they are for deposit only. There is no letter advising the customer of this fact either. Is there any information on this? Also, if the check is negotiable as per the 5 points of negotiability, why won't the bank cash it? Also, what is the purpose of this practice? It seems that companies that do this take advantage of people without bank accounts. An account of this type probably results in a higher percentage of "thrown-out" checks. Are these companies just greedy, or is there a reasonable explanation?
Answer: 

Answer by John Burnett: If there is no language on the check limiting negotiability, I am unable to figure out why these checks would not be exchangeable for cash, except in cases where a bank's policy addresses such checks.

There is no reason I can fathom that an issuer would want to prevent its checks from being cashed. So, unless I'm missing something here, the target of your indignation (or questions) should be the bank being asked to cash the check.

Answer: 

Answer by Ken Golliher: Where are you getting the impression that these checks cannot be cashed? If you re-post in the Operations Forum, we will respond, but we need to know how you reached your conclusion that the checks are for deposit only.

First published on BankersOnline.com 1/5/04

First published on 01/05/2004

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