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Dear Dr. Don,
I have a check drawn on a national bank that the bank refuses to cash because I'm not a customer. Can you provide
me with the legal information I need to force the bank to cash my check? I have proper identification and the account
has good funds for this check to clear. Chase flatly declines to cash checks for noncustomers even under the above
circumstances.
-- Ed Egregious
Dear Ed,
I'm with you: I believe a bank should be obligated to cash a check drawn on one of its accounts without requiring
the payee have an account relationship with the bank.
A checking account is a demand deposit account because the account holder is writing checks that are
payable on demand, subject to good funds being available in the account. Payors don't ask about your banking
relationships when they write you a check. It shouldn't matter that you don't have an account with the bank.
However, my solidarity with your position isn't going to help your situation. According to the Office
of the Comptroller of the Currency, Chase isn't obligated to cash your check. Here are two excerpts from
the OCC's "Check Cashing
Answers" FAQ page that explain why not:
I went to a bank to cash a check that was drawn on the bank. I do not have an account with the bank and they refused
to cash the check. Can it do this?
Yes. There is no federal law or regulation that requires national banks to cash checks for noncustomers. Most banks
have policies that allow check cashing services only for customers who have an account with them in order to protect
both themselves and their customers from forgeries.
Once a national bank cashes a check that has been forged by a noncustomer, they may lose money if they cannot collect
from the person who cashed the check. Also, if a national bank agrees to cash a check for a noncustomer, it may legally
charge the presenter a fee.
Why doesn't a national bank have to cash a check that is drawn on them?
There is no federal law or regulation that requires national banks to cash checks for noncustomers. Most banks have
policies that allow check cashing services only for customers who have an account with them in order to protect both
themselves and their customers from forgeries.
Once a national bank cashes a check that has been forged by a noncustomer, they may lose money if they cannot collect
from the person who cashed the check. Also, if a national bank agrees to cash a check for a noncustomer, it may legally
charge the presenter a fee.
While I haven't cited the relevant parts of the law that make this so, you can take it to the bank that
Chase isn't obligated to cash your check if you don't have an account relationship.
If this is a payroll check, your company may offer options for its employees that don't have a traditional
bank account relationship. Typically these "nonaccount" accounts make a paycheck accessible though the use of a payroll
card that is used like a debit card.
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