Two weeks ago I made out a check by phone to a utility company for around $500. I recently found out that the utility company was about to terminate my service because my bank decided to take the money from this check back from the utility company. Is this legal? Can the bank take the money back from the utility company without my consent?
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If there were not sufficient funds in your account when the "phone check" reached the bank, the bank certainly had the legal right to refuse payment, whether that "phone check" reached the bank in paper or electronic form.
There is also the possibility that your bank identified the "phone check" as an unsigned paper item, and decided that it could not verify that you had authorized the payment. Accordingly, the bank may have decided to return it.
In either case, the bank would have been obliged to return the check by midnight of the business day following the day it received the check. If it missed that deadline, it should not have returned the check. If you have not already contacted the bank to find out why they returned the check, you should do so.
Published on BankingQuestions.com 4/02/08
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If there were not sufficient funds in your account when the "phone check" reached the bank, the bank certainly had the legal right to refuse payment, whether that "phone check" reached the bank in paper or electronic form.
There is also the possibility that your bank identified the "phone check" as an unsigned paper item, and decided that it could not verify that you had authorized the payment. Accordingly, the bank may have decided to return it. 