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Home >> Checks/Money Orders >> Checks You Wrote
Business Cashes Check and Puts Self as Payee
I issued a check to an individual who cashed it (2-party) at a business who used a conversion company to convert the check for electronic submission. Apparently, my bank required the facilitator to present an image. Since the original was destroyed by that time, the company recreated a check image using my account number routing number and check number, only they listed their business name as the payee and the accountholder. Luckily the item was slightly over $1.00, but it begs the question: was this practice permissible under federal banking laws?
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 The business would not be authorized to convert such a check to an Automated Clearing House (ACH) check conversion transaction, because ACH rules require that such a conversion be authorized by the issuer of the check. That requires the issuer to be present or to be the party sending the check to the business.
However, a business enrolled in a Remote Deposit Capture program would be permitted to capture the check in an image format and forward the image, rather than the original check, for deposit and further processing. Based on your description of events, it seems that the business had no authority to engineer an image of your check. If it had not destroyed the check, it could have gone the Remote Deposit Image Capture route once the ACH transaction was rejected.
Published on BankingQuestions.com 11/14/08
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