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A 28-year-old sergeant first class at Fort Benning, Ga., is angry at his bank after he bounced $2,500 worth of checks.
Robert, who asked to be identified only by his first name, deposited a $3,800 check into his USAA account after selling a pool table on Craigslist. He said he held onto the pool table, knowing the check might bounce.
Meanwhile, USAA credited the money to his account and, after a few days, he began to spend it.
But the $3,800 check did bounce — and in turn, the $2,500 worth of checks and debits he had already spent also bounced.
Robert wants USAA to give him that $2,500.
"They took the risk. It should be their responsibility," he said. "It's their job to clear a check. Had they done their job and put the money on hold, this wouldn't have happened."
But just because a bank credits money to your account doesn't mean it's yours, say consumer advocates and the American Banking Association.
Banks don't have a duty to verify that a check is good before crediting it to your account. "In fact, the Expedited Funds Availability Act can sometimes force a depositary bank to make funds available before it is possible to know if the check will be paid or bounce," said Cathy Lesser Mansfield, a law professor at Drake University Law School.
Unfortunately, Robert's situation "is one of the side effects of the otherwise positive rule that banks make funds quickly available to consumers," said Lauren Saunders, managing attorney for the National Consumer Law Center. "As banks increasingly process checks electronically, this situation will happen less and less, but it does still occur from time to time, especially in scam situations like Nigerian check scams."
The person making the deposit is responsible for ensuring the check is good. Here's how it works:
• For most checks of less than $5,000, federal law requires banks to allow customers to use the funds within a day or two. Usually, the checks have not cleared by then, said Nessa Feddis, vice president and senior counsel for the American Bankers Association. So while a check may show up as being credited to your account, it can still bounce. Sometimes a bank doesn't find out for three days or more if a check has bounced, said John Hancock, a spokesman for USAA.
• If the personal or nongovernment check is for more than $5,000, the bank might hold the amount in excess of $5,000 for seven or more days, depending on the type of check and several other factors.
• Besides the federal law, banks have their own policies. USAA takes into consideration the deposit history of the member in determining whether or how long to hold funds, Hancock said.
• The law also allows a bank to take money from your account if you've drawn on funds from a check that bounces.
Hancock recommends that rather than accept a personal check from someone you don't know, you should request a cashier's check or other form of guaranteed payment instead. Before you draw on the funds of a personal check you deposited, call your bank to confirm that it has indeed cleared.
In Robert's case, he found out too late that the check was written on a closed account. "It was not really worth pursuing" the person who wrote the bad check, he said. "My discontent came with the way USAA handled the situation."
Consumer advocates and the ABA's Feddis said Robert was smart in not handing over his pool table to the buyer before the check cleared and that he may have been the victim of a scam. Feddis suggested he file a complaint with Craigslist.