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Home >> Checks/Money Orders >> Checks You Wrote
Who Pays for Bank Errors?
I live in Kansas and I wrote a check to a friend to whom I was going to loan money. Over the weekend I changed my mind, and called the bank at 8:10am Monday morning, gave them all of the information, check number, amount, that another check was not going to be issued, who the check was to, etc. The person who did the stop pay checked and the check had not been cashed. The person I issued it to doesn't have a phone, and I could not notify her of my decision to stop payment on the check, but I did notify the bank that this person would be driving through the branch that day to cash it. They assured me it would not be cashed, because the stop pay was done. Later in the afternoon I was online checking the activities of my account, and the check had been cashed at the drive-thru earlier that afternoon. The bank says they are going to credit back the money to my account because it was cashed after the stop pay was issued, but what happens now? Who is liable for that money? The person that cashed it didn't know that the stop pay had been done and has spent the money paying bills. Who pays for banking errors?
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 The bank is out the money unless it can identify the individual that cashed it, presumably your friend, and collect from her. In most states, the bank will have the ability to use a "payment in error" excuse to collect the funds.
Published on BankingQuestions.com 3/19/09
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