My bank recently issed me a new ATM card that is hooked up through a different network than my old one was. I’ve used it successfully for withdrawals at a few automatic teller machines near where I work. However, last week I tried to deposit a couple checks in these same machines. The few I tried gave an error message (“institution unavailable” or something like that) when I tried to deposit, even though I could withdraw from the same machine only a minute later.
I called my bank to ask for an explanation, and the woman I talked to just said that “some machines will accept withdrawals and not deposits.” She suggested a particular machine that would both, which I used for both withdrawal and deposit without incident.
So my question is: Why is it that an ATM network is configured so that some machines accept withdrawals but not deposits? Is this done on purpose, or is it an unintended consequence of the way ATM networks operate?
While Cnote’s answer may explain some of these policies, there is a more likely explanation.
If checks are deposited into an ATM owned by a bank other than the bank where the depositor maintains his account, that other bank (“OB”)is arguably the depository bank. (UCC and Federal Reserve definitions of this term lead to different conclusions.) Why is that important? Because the depository bank is liable for certain kinds of check frauds.
I have a case where a bank client is looking at a $500,000 liability because a check scammer deposited the checks into the client’s ATM. The client had zero chance to detect the fraud, because it didn’t have the account, which means it had no signature/account info on file.
Another bank client refuses to accept OB deposits for this reason, and the bank which is being sued probably will be changing its policy.
starfish: I tried four completely different banks (none of them branches of the same parent), all of which would let me make withdrawals, none of which would let me make a deposit. I called my bank (again, different from the ones I tried), and they suggested I use yet another bank, which did accept my deposits.
Random: I’m sorry, but your explanation confuses me. I assume the example you’re giving is: Scammer opens account at Bank A. Scammer deposits bogus checks at Bank B’s ATM. Scammer’s account at Bank A is credited. Scammer cleans out account at Bank A, and disappears.
However, I thought that deposits weren’t credited to my account until the deposited checks physically arrived at my bank. Not true? Is it really that easy to dump a half-million into my checking account?
I admit I was vague, but I was (and am) uncomfortable giving too many details on precisely how to pull of this scam.
The checks in question were stolen by the scammer. They were payable to his employer, and therefore were valid checks, albeit with an invalid endorsement. They cleared (and the account was cleaned out) before the theft was discovered.
This is only one kind of scam. There are others that take advantage of the Expedited Funds Availability Act, a Federal law that places strict limits on how long a bank can delay crediting the account.
Bankers are justifiably concerned about this issue. If the courts ultimately place the liability on the ATM-owning bank, look for virtually all banks to stop accepting foreign bank deposits. (The law is unsettled right now, as I mentioned in my previous post.)
I’ve been in banking for 15 years and have never heard of a bank accepting a deposit for any institution other than itself - not at an ATM, not over the counter, not through night drop, not any way. Banks, through the Federal Reserve System, are set up to process debits drawn on other institutions but credits are a whole different ball of wax. Credits (deposit slips), and some debits (like savings withdrawals) have what is known as an internal R/T on the MICR line. The MICR (Magnetic Ink Character Resognition)line is the dull, black ink printing on the bottom of a check. It includes the account number, routing and transit (R/T) number, check number and, eventually, the amount of the check. The R/T identifies the payee bank - where the account is held. Every bank has its own unique 9 digit R/T. In the case of a check the R/T guides the item from the receiving bank, through the Fed system and to the payee bank where it can be posted. An internal R/T, OTOH, tells the bank’s processing equipment that this item is already home and does not go through the Fed. I know for a fact that a deposit slip cannot be processed through the Fed system.
The only way I can imagine this to be possible is that the banks in question have some sort of agreement to exchange each others deposits (via courier) daily. This would be risky at best and further compounded if one or both banks have a business day cutoff prior to end of day (you know - deposits made after 2:00 are considered the next days business). Add in Reg CC, the Expedited Fund Act mentioned by Random, and you have a whole 'nother series of reasons banks should not do this. I can think of zero benefit to a bank in accepting deposits for another bank and about a billion reasons not to do so.
To answer the OP, ATM’s are computers. Some are programmed to accept deposits. Some are merely cash dispensers. Others are programmed to print statements or dispense travelers checks, coupons, change, etc. There are many possible reasons for various configurations, but most have to do with marketing, machine location, and cost.
Where be these banks that accept ‘foreign’ deposits?
Huh. Is it really that rare? For the last twelve years, I’ve done my banking with two small local banks (sequentially, as I’ve moved) here in Michigan. Both banks had only one or two branches, and something like 3-6 ATM machines to their name. In all this time, I’ve almost never used my own bank’s ATMs for deposit. Years ago, I used to deposit my bi-weekly paychecks exclusively in other banks’ ATMs.
Nowadays, I only use the deposit feature once a month or so. However, up until last month (when my bank changed ATM networks), I could use any one of three different banks within walking distance of work to deposit. (There is a fourth bank that might have been rejecting my attempts at depositing all along, but their machine was unreliable even when withdrawing, so I quit using it.) Now that these three (four, really) won’t accept my deposits, I use the ATM a mile down the street. My bank listed a couple more ATMs within a mile radius that would accept my deposits, all of which belong to other banks.
Up until now, I’ve assumed that all bank ATMs will accept deposits from anyone whose account is connected to their network, even through another bank, unless the network is down or something.