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Banks can make ‘reasonable’ ID requests

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Dear Dr. Don,
Where are the banking laws in regard to cashing checks? One bank has a new policy where noncustomers must provide Social Security numbers along with occupation, address, two forms of I.D. — and a fingerprint! That’s just to cash a check. This is outrageous. Is it legal?
— Rob Rigmarole

Dear Rob,
It sure does sound like overkill to require all those things to get your check cashed. I’m going to assume that the check was drawn on the bank in question and that’s the reason why you went there to cash it as a noncustomer.

Here’s an excerpt from the Office of the Comptroller of the Currency’s FAQ page, “Answers About Cashing Checks“:

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.

The Uniform Commercial Code does speak to the wrongful dishonoring of a check presented for payment on the bank that it was drawn against. You’ll find this information in Section 4-402, “Bank’s liability to customer for wrongful dishonor; time of determining insufficiency of account.” Banks typically finesse the dishonor issue by requiring reasonable identification, which is also part of the UCC.

Section 3-501(b)(2) of the Uniform Commercial Code speaks to the requirement that the payer bank has to be able to identify the payee and can require reasonable identification. That provision in the UCC is presented below:

(2) Upon demand of the person to whom presentment is made, the person making presentment must (i) exhibit the instrument, (ii) give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so, and (iii) sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.

So, your complaint rests on what can be considered “reasonable identification.” The thumbprint requirement has survived a court challenge in Maryland. As for the rest, banking laws can and do vary by state.

I’d suggest that you take this issue up with your state banking commissioner. The Conference of State Bank Supervisors has a directory, “State Banking Department Links,” and provides the contact information on its Web site.

To ask a question of Dr. Don, go to the “Ask the Experts” page, and select one of these topics: “Financing a home,” “Saving & investing” or “money.”