A while back, I read something to the effect that one way to handle potentially iffy checks you received was to place them “for collection” with your bank rather than depositing or cashing them as normal. They said that while there might be a fee for this service, it gave you peace of mind that the bank would not actually place the money into your account until the check had actually been paid.
Is this a real practice that banks actually offer? If so, would a common, ordinary checking account customer at a US bank be able to do this, or is the practice phenomenally expensive or reserved as a courtesy to high-balance customers?
If this is actually available, to what extent does it actually protect the check receiver from problems with the check? For example, once such a check clears, can it be administratively revoked (with money withdrawn from the receiver’s account) for any reason? Administratively revoking a check includes the alleged payor calling their bank and saying the check was not authorized and to please be so kind as to revoke it, but does not include the alleged payor suing the payee in a court of law to get the money back, nor does it include a criminal prosecution against the payee for fraud, embezzlement, theft, or another offense committed against the payor with a request for a restitution order.
Interesting question. When I was younger (17) I had a landlord tell me he did this. He said he had already put my rent cheque in his bank - even though it was post-dated - and it would be cashed first thing on that date. I didn’t understand how the hell he could do that with a post-dated cheque.
When I was a bit older I (stupidly) accepted a cheque from a guy that I knew would bounce (hey, I was trusting and gave him the benefit of the doubt) and when I tried that at MY bank - depositing the cheque before the date on it so it would go through immediately when the date happened - the bank told me they did not and could not do that. Of course the cheque bounced when I did cash it.
I always thought that landlord was bullshitting me because I was a kid and didn’t know any better.
Once I had an “iffy” check for $8000. It was in USD and my friend who had received it knew I had an account at a US bank and asked me to try to deposit. Oddly enough, it was a certified check. I never know why he considered it iffy. I still don’t. I mailed it to the bank along with an explanation. They deposited it in my account anyway. A month later they returned it as uncollectable. No surprise. The surprise was that they paid a few dollars interest! This was a small bank and they either charged no returned check fee or it was smaller than the interest. When I told my friend about this (as I returned the check), he said that for the month they had the check on their books their capitalization was up by $8000 and they were theoretically able to make loans against it that they profited from and they were sharing their profits with me.
Yesterday I had a teller refuse to deposit a check for me because the person had mistakenly written the wrong month (Nov 24 instead of Oct 24) on the check. I had always heard that banks really don’t care about the dates written on checks. I didn’t press the issue since it’s easy to get her to write a new check but it was a surprise to me.
As I understand it - If a human does not catch the date issue, nothing else will.
I remember hearing about “on collection” decades ago; I imagine it’s one of those services that disappeared a while ago since it was more trouble than it was worth. After all, you would have to go and request the service from the correct bank or branch? Plus, nowadays we deal more with image of cheques than cheques, making it more difficult to validate an outstanding cheque, and the bank is less inclde to keep piles of paper around waiting for funds to come in.