Stop Payments – We have all had it happen when receiving or sending a payment by check through the mail. The check is not received or gets lost. The issuer goes to the bank and requests that the bank stop payment on the check. (Note – it is very important you know the check number. Make sure to either write down the number or better yet – make a copy of the check.) A replacement check is sent. So what happens a few months later when the original check is found and deposited? Will the bank cash the check even though a stop payment has been issued? The answer is yes. Stop payments are only good for six months. If the check is presented to the bank after six months, the bank may honor it. The only way to prevent this from happening is to print “void if not cashed within xxx days of the above date” on your checks. (The length of time is typically 90 to180 days.) Though this is typically found on business checks it can also be written on your personal checks.
Stale Date – But wait you say! If the check is many months old, doesn’t it have a “stale date”? Unfortunately, there is no law or hard-and-fast rule that banks must adhere to regarding stale-dated checks. According to the Federal Deposit Insurance Corp., if a check is presented for deposit more than six months after the date on the check, it is reasonable for the bank to assume that the check may be uncollectible — and therefore the financial institution can refuse to deposit or cash the check. But the banks don’t have to do this. The other issue is checks are being electronically deposited through cell phones (see below) or through ATMs. There are no human tellers to review the checks and kick them back because they were issued incorrectly, are too old or for other issues. I had a business check cashed that was nearly a year old after the recipient said they never received the check. I reissued the check but did not put a stop payment on the original check. Silly me I thought the bank would refuse to accept it due to the old date. Luckily, I was able to get the recipient to refund the duplicate payment though it took about a month and several phone calls.
Cashier’s Checks – Since cashier’s checks have already been paid for in cash, they do not have an expiration date. But let’s say you wrote out a cashier’s check and dropped it into the mail. Then you discovered the check amount was incorrect. What can you do? The answer is not much. Cashier’s Checks under $500 cannot be revoked for at least 30 days. Checks over $500 can be revoked but it is a painful process requiring you to get surety bond and other paperwork. The easiest course of action is to get the recipient to return the check so you can take it back to the bank, have it voided and then issue a new cashier’s check. Several years ago, one of my clients sent a cashier’s check to the title company along with some paperwork. The check was not stapled or attached so the paperwork was removed, and the check thrown out with the envelope. It was a huge risk to the client, but the bank reissued the cashier’s check. The bank warned the buyer if the check was found it could be cashed. Luckily the check was buried somewhere in a landfill never to be seen again.
Depositing Checks Using a Phone App – Ahh the wonders of technology. Some banks allow iPhone users (and other smartphones, including Android phones) to deposit checks simply by taking a picture of the check. Select banks and credit unions offer the ability to use your phone’s camera and a secure application to save their customers a trip to the branch. Of course, the bank will say “be sure not to deposit the check another time and you should write “ELECTRONICALLY PRESENTED” on the check to avoid legal problems if you accidentally deposit it again”. But ultimately the same check can be deposited over and over again. If the check gets deposited multiple times the person who issued the check will have to spend the time and aggravation to get it straightened out. The banks are not taking any responsibility. There is really nothing you can do to prevent someone from depositing the check electronically multiple times. Hopefully the banks will implement some type of way to stop this.