Why do banks want a fee from the *recipient* of a bounced cheque?

Factual Questions
1

Last week I bounced a cheque. (It happens…) Of course I was changed the usual bank fee for issuing the NSF cheque. And the next day I went over to the recipient and gave them cash.

However, the recipient also got charged a fee. They have asked me to pay this fee, and I will, no problem.

But why does the bank charge the recipient this fee? Just because they can? Is there some sort of rationale?

It just seems like adding insult to injury for the recipient. If it’s intended as a ‘punishment’ it seems rather useless for that purpose, since any recipient with sense will ask the issuer of the NSF cheque to pay it.

2

1- Because they can and that is how they make money

2- The argument is that it increases their work

3

In the general case, there are two banks involved – the bank against which the check was written, and the bank at which the recipient deposited the check. Each bank is put to some extra trouble by a “bad” check, and each will thus tend to exact a fee for this trouble.

I agree that the fees often seem excessive. I’m sure the banks would argue that it’s valid to charge more than the processing costs to handle cases where funds to cover a bad check can’t be collected.

4

Because they can. No reason needed.
See “Somebody vs Bank of America” a few years ago.
Ok, so I don’t remember a lot of details. But a few years ago someone sued B of A, in California, and the court ruled just that. Basically, if you don’t like it, get a different bank. All fees are disclosed before you open an account. They are allowed to profit by your overdrawing your account. But if they screw up, you are not allowed any fees in your favor. Cool business, huh?
Peace,
mangeorge

5

Because they can, and do, charge as many people as possible fees to do everything. Banks rank right up there with trial lawyers, IMO.

6

Greed.

7

Banks make more money (percentage wise) from fees than from charging interest on loans. So they charge whatever they can.

Bouncing a check is incredibly profitable for a bank. Even more profitable is not bouncing one, but charging you an overdraft fee.

8

I read an interesting article in the paper recently. Have you noticed how many banks are offering free checking nowadays? Seems like they have realized that the type of people who open these types of accounts are the same ones who will occasionally (frequently) overdraw. They realize that by the next payday these overdrafts will be made good. So they are more lenient with the holders of the free accounts, letting them have up to two weeks to take care of any overdrafts that occur. And charge $30 a pop. In other words, the banks have gotten in on the “payday loan” craze and are profitting quite well from them. Since it is not at all a “loan” but a “service charge” they can set whatever fee they want.