Holding Down the Check Fort: Tips for Backup Staff

Amy Donaghue

By: Christine Harris, AAP, APRP, NCP, Senior Manager, Member Support

Summer is in full swing, and for some of us, that means fun at the beach, road trips with family or even a good old staycation. But while some folks are out enjoying sunshine and picnics, others are holding down the fort back at the financial institution. And sometimes those folks are performing tasks outside their normal duties and maybe even outside their comfort zone. While we hope there are procedures in place to help these fill-in heroes, that’s not always the case. So why not take a few moments to cheer on those who make our summer fun possible and give them some basic payment processing guidelines to bolster those unfamiliar procedures?

Last week we covered tips for handling everyday ACH handling situations. Now let’s look at everyday check handling situations that are the center of frequent questions to EPCOR’s Member Support team. You may even want to print them so your backup staff members can have a handy cheat sheet within fingertip reach!

Check Handling Tips for Backup Staff

Returning a Problem Check – Not Just a Breeze

A truth as cold and hard as a popsicle fresh out of the freezer is that all checks - regardless of return reason – can only be returned for 24 hours from the time the item was presented to the paying bank. But let’s face it, the situation revolving around why a check needs to be returned usually extends past that time frame. So how can you keep your financial institution from getting sunburned? First, we must understand who guarantees what. Let’s take a look.

*Paying Institution Has a Full Beach Bag

The paying institution, or drawee institution, carries the following warranties in the check world:

  • Signature on the front of the check – if the signature is forged or missing altogether from the front of the check, the Paying institution (per check law) is in the best position to catch this, as they have a signature card on file.
  • Counterfeit Check – a check that has been manufactured on a home computer, one that a fraudster ordered from a check printer using stolen banking information or any other form of bogus paper is considered counterfeit, and the paying institution is liable for those types of items.

*The Bank of First Deposit (BOFD) Umbrella

Forged, Missing or Improper Endorsement – Anything that is a problem with the endorsement on the back of the check is the responsibility of the BOFD. Along with this, they warrant that the named payee on the item benefitted from the check.

Altered Check – There is often terminology confusion between altered, fictitious and counterfeit. An altered check has been changed from the original item. This would cover a check that had been washed, a changed payee name, a changed amount, etc. Check law assumes the depository institution can catch these since they are sometimes seeing that item. A fictitious item is similar to a counterfeit but all of the information on the check is fabricated (name, address, etc.)

  • *SHARK WARNING* - check law was written back in the dark ages when financial institutions physically saw items they were processing, either for deposit or for clearing. Today’s environment means that most financial institutions do NOT physically see items, but unfortunately check law has not caught up with current processing practices. Make sure you understand when you have the right to take action against the other institution, so you don’t get bitten.

If you have a situation where the other financial institution warrants the issue you are seeing with your check, you may have recourse either through the Federal Reserve Bank adjustments process or by dealing directly with the other institution via a Breach of Warranty (BOW) to save your institution from a loss. Many adjustments provide up to a year to resolve the issue, and a BOW could be filed for up to a year for some of the fraudulent situations discussed in this article. So don’t despair when you miss that 24-hour window. You still may have a way to work things out. Remember, you can reach out to EPCOR to walk through your specific scenario!

Payees on a Check – if the check is payable to Clark and Ellen Griswold, then both parties must endorse the item to negotiate it. If the check instead says Clark OR Ellen Griswold, either party can endorse it. If there is no word between the two names, then the “or” is inferred and either party can sign.

There may be other troublesome situations that arise as you valiantly hold down the proverbial fort, and if so, don’t forget you can reach EPCOR Member Support live during business hours (7:30 AM to 4:30 PM CT) via phone (800.500.0100), email (memserve@epcor.org), or by chatting on our website at epcor.org.

Your colleagues thank you for being there for them when they have their summer fun, and we all hope you get to have some summer fun in turn. Don’t forget your sunscreen! And, if you missed last week’s ACH handling tips, click here!