Bank balks at cashing a payroll check - why?

Factual Questions
1

It used to be that if a teller asked “Do you have an account with us?”, a “no” answer would provoke a spiel to open an account, but that was it.

However, just this morning, a Bank of New York teller refused to cash a paycheck for me because although the company had an account there, I didn’t have a personal account with them as well. She gave me quite an attitude, so I threw a little snit, mentioning that my boss is friends with the bank manager… and after getting shuttled over to the manager and showing my driver’s license, the manager cheerily signed off on the check and it was (grumpily) cashed for me.

Now, I’ve had other banks balk at doing things like sell me a roll of quarters. While that’s annoying, I can sort of understand that, especially if the branch caters to small local businesses that need coin. I can also understand (although I would grouse) if they wanted to charge a fee for cashing the check. But in this case, the money was earmarked for me from funds held by one of its own accountholders, so why the fuss at giving me my money at all? I would have gotten the money eventually anyway via a deposit of the check to my own bank (Bank of America). Is it that much easier for them to try to strong-arm me into opening an account (so that I can get any service at all), rather then try to entice me into doing so?

2

It’s funny you mentioned Bank of America, because BoA refused to cash my payrool check the other day because I did not have an account with them. The company I work for does, of course, and the payroll check was drawn on their bank. Their reasoning? There might not be sufficient funds in the account to cover the check, according to the teller. :rolleyes: Riiiiight.

3

That shouldn’t be your worry. If you have a check, they should cash it. If the writer of the check doesn’t have funds to cover it, the bank should know where to find them and ask them why they wrote a bad check! This has nothing to do with you. Right?

4

At this point I would ask for the head teller. OR the Branch Manager. Get the Manager to come to you!
Making a little 'noise" helps as they would rather not have too much attention drawn to the fact they are being a bit C.S. about the whole deal.

5

Unless its still 1963 at Bank of America they can check the balance of the account almost instantly.

I reckon they just don’t want to provide any service that they can’t charge a fee for.

6

What spingears said. The way to respond to such nonsense is to very loudly demand to see the manager, and very loudly give him hell about the lack of service, etc. Make sure everybody in the branch hears you. Remain polite, but get seriously on his ass about it. Then write a letter to the editor of the local paper, detailing the incident, with names, date and time. Copy this letter to the local branch and the head office, For Attention of the CEO.

7

I once did some freelance computer work for an acquaintance. He was a photographer, and needed to learn how to use the new Windows version of his graphics software. I agreed to teach him, and spent several days working with both him and his assistant. He gave me a check from his photography business to cover my time and expenses.

Since it was only for a few hundred dollars, I decided to cash the check rather than deposit it in my own bank. I went to his bank (and branch) on the way home, just a few blocks away from his studio. The teller told me I couldn’t cash the check because I didn’t have an account with them, and that my ID was not acceptable. I had given her my military ID and my Drivers license – I can’t imagine what the problem was. She also flatly refused to get the manager for me, all-in-all a very odd interaction.

If I’d been wearing my leathers and riding my Harley, I might have understood her reluctance, but I wasn’t. I was just a normal guy, looking to cash a check from a local business. I wasn’t comfortable causing a scene in the bank, mainly because I was in ‘professional’ mode.

I took the check back to the studio, and told the photographer that his bank wouldn’t honor it. He was shocked, embarrassed, and really pissed at them. We both went back to the bank, where he roundly savaged the teller, manager, and anyone else within earshot. When they were less than sympathetic, and refused to acknowledge that they’d done anything wrong, he closed his business accounts. They claimed that they were protecting him, as a business owner. WTF? Protecting how? By not honoring his checks?

We walked across the street, and he opened an account at that bank. He drew a counter check for the amount he owed me, which I cashed with no problem at the teller window, and left. He told me later that he moved all the rest of his money, mortgage, everything, to the new bank the next day, when his wife could sign the accounts with him.

He also made a point to tell everyone he knew, for months, about the trouble he had at that bank. Within a year, that branch was closed.

In the few times since that I’ve had checks to cash, and been refused, I have caused some minor scenes. Telling them that “I guess I’ll take this check back to so-and-so and tell him his check’s no good” seems to do the trick.

Now, of course, the banks have more control over their customers because there is far less competition. I can only speculate that banks are reluctant to give cash to people because of the increase in fraud and identity theft. If you just move money around on paper it’s a lot easier to get it back than if you hand it to someone who walks away.

8

My dad is the President of his own Corp. Once a month he cuts himself a check from the business for his wages. A standard practice, one would imagine. Being the President, he signs his own check.

His bank wouldn’t cash his check. They said they needed to contact our company to verify that it was ok because the check was large (the check was a couple thousand dollars, not HUGE by any standards). My dad calmy explained that he IS the company (we are the only two employees) and therefore they would be unable to get ahold of the President- as the President is standing in front of them. They refused to cash or even deposit the check. I was amazed.

Needless to say, the bank lost a pretty big account that day (I hear from friends that work at that branch that it was one of their bigger accounts). Before long, that bank was closed and bought out. Hm. Wonder why?

9

I should mention that this was his business and personal bank. And my bank. And he had four different homes mortgaged through them. So it’s not like he was a stranger.

10

For a banker’s take on this:

http://www.bankersonline.com/ubbthreads/showflat.php?Cat=0&Board=consumer&Number=377533&page=0&fpart=1

Basically, some bankers who discussed it thought it was a spiffy way to reduce the number of people who were in line. These bankers saw the non-customers cashing check as a nuisance that decreased customer service for their real customers.

Most of the bankers in there thought that the banks that do it are freaking insane and are driving customers away.

While my personal take is that if I write you a check I think you to be able to cash my check at my bank, at least one bank I do business with explicitly states in the customer agreement that they reserve the right to not do that.

I see charging a convenience fee for cashing a check like this that is in line with what the teller costs the bank as reasonable, if somewhat rude. It probably costs the bank $2-3 per transaction when you do anything at the teller line when you roll the rest of the branch overhead into the equation.
That and convenience was the original rationale for ATMs, before the late 90s hit and banks decided that the point of an ATM was to charge fees. ATMs allegedly cost about half of what tellers do to operate, and steal less.

11

I’m a little confused. If someone writes me a cheque I take it to an ATM for my bank (there’s pretty much an ATM within walking distance at all times for my bank) and deposit the cheque there and I immediately have access to the money (although for the first few months after signing up for your bank account you generally have to wait a day or two before getting access to the money). But I also don’t understand why you wouldn’t just take the cheque to a branch of your own bank. Is it because it would be quicker to get the cash if it is at the bank the cheque writer had an account with or is there another reason I’m missing?

12

I had always thought that a bank was required by law to honor any checks drawn on their bank, provided that the person presenting the check has identification to demonstrate that he is, indeed, the payee. Is this not true? And if not, what justification do they use?

13

If your paycheck was drawn on that bank, even if you don’t have an account there
the bank has to cash it providing

A) You have valid ID. A drivers licence or state ID card of the state you are in.

B) There are enough funds to cover said check.

If they had said, sorry there are not enough funds in this account to cash this check
then you go back to your boss and say WTF!

Ohterwise, as mentioned by others, the bank was purposefully giving you a hard
time because the are providing a service to you and can’t make any money off of you.

Screw them, they make plenty of money off your employeer!

Mr. Slant

While my personal take is that if I write you a check I think you to be able to cash my check at my bank, at least one bank I do business with explicitly states in the customer agreement that they reserve the right to not do that.

Is said bank a member of FDIC “Federal Deposit Inscurance Company”? Any reputible
bank is, and to be able to operate as a bank in New Youk State, you have to be!

If so, that bank is not adhearing to the FDIC rules/by laws, and in NY, is breakng the law
no matter what they have printed in their literature!

Silenus is right … make them and everyone in the bank know what is happening! They
prey on people being meek!

PS Frormer bank teller in NY!

14

Does anyone know what Chase’s policy is on this? I went to one of their branches to cash a check drawn on a Chase account, but the teller told me I couldn’t do this. I think the teller was just being a jerk, but I’d like to be sure.

15

I have never thought that. A check is a promise to pay from one private individual to another. All sorts of reasons why a bank may not be willing to cash a check. That said, if anything like the OP happened to me or someone to whom I gave a check to, I would immediately find another bank. However, I have heard tellers in my bank, when asked, cheerfully say that of course they would cash a check drawn on an account at their bank. I assume the people presenting the check didn’t have an account there. So, not all banks are self-destructive.

16

Well… that’s what I thought. And I know that in years gone by, I haven’t had a problem cashing a check at the payer’s bank even when I didn’t have an account there, so this morning’s refusal threw me.

If I were to take a check to my bank and deposit it on a Tuesday, say, the first hundred dollars wouldn’t be accessible until Wednesday, with the rest of the check clearing by Thursday or Friday (depending on the size of the check, whether it’s an out-of-state check, etc.). A cash deposit is fully available immediately, however, and since I had some automatic payments scheduled from my checking account this week, I wanted to be sure the full amount of my paycheck was available to cover them. That’s why I went to the company’s bank to cash the check.

I didn’t raise a huge fuss in the bank because a) I was the only one in there at the time (nuisance that I was, holding up all those other customers :rolleyes: ), and b) my boss would have been upset to hear that I had embarrassed a friend/business associate publicly. My office manager was really ticked to hear about the incident this evening, though. She swears this is the last straw after a series of service issues, and she’s planning on moving our accounts by the end of the month.

17

Bzzzt! Wrong answer! In your scenario I could steal a buttload of corporate checks and, so long as I have ID and there are funds in the account, the bank must honor the checks. Not so. A bank is a private business and as such can refuse service to anyone, anytime. There is no law or federal regulation that compels a bank to cash a check for a third party. The decision to cash third party checks is a customer service issue to be decided by each bank (sometimes the policy differs from branch to branch within a bank). Take care of this like any other customer service issue - vote with your feet.

PS - if we’re giving creditials, I’m a former teller, branch manager, complicance officer, and operations VP at a multinational bank.

18

No, that would be a note. A check is a variety of draft, which is an order drawn by one person (the drawer) directing anther person (almost always a bank- the drawee) to pay a certain sum to the order of a third person (the payee).

A bank that refuses to cash a check drawn on it (assuming sufficient ID and funds in the account) exposes that bank to civil liability for wrongful dishonor. The party that has that claim is the drawer, and damages can go well beyond the face amount of the check. See UCC Sections 3-104 and 4-402.

19

So you’re the one who complicates things at the bank!

20

Exactly. Why should it make any difference to the bank whether the check is presented indirecty (by another bank) or directly (by the payee). The wording on the check says, “Pay to the order of [payee]” and the amount to be paid. What can be more clear than that?