I'm a general contractor who handled an insurance job. The insurance company made out a $30,000 multi-party check made payable to my company, clients (husband and wife), and bank ABC (which held an interest due to a home equity loan). Husband and wife endorse the check and got bank ABC to endorse, and I endorsed with my business name. I proceeded to deposit it into my business account at bank XYZ, which I did in person with the bank manager due to the size and the multi-party endorsements. I even had the clients go with me in case there was an issue. The manager reviewed everything, accepted it for deposit and said the funds would be accessible subject to a 5 business day hold.

After waiting 5 business days, checking with the insurance company that the check had actually cleared (which it did in 2 days), and verifying my balance on line I started to write checks for at least a portion of the available funds. After the 8th day I start getting over a dozen NSF notices! When I contacted the my bank they said that their fraud department had frozen my funds. The fraud department claimed they had the right to do this because they "didn't know the endorsers on the check".

My bank then proceed to then wait another week and then snail mailed a check for $30,000 back to the insurance company! This was even after I had the insurance company contact them directly and tell them they didn't want the money back, that I was the contractor and everything was on the up and up. I then had to wait an additional week for the insurance company to reissue another check. My bank then had the unmitigated nerve to demand over $800 for bounced check fees. (Needless to say I deposited the check at another bank and closed that particular account, but they still want $800, plus I'm still out from the fees owed to those I wrote the checks to, plus embarrassment of giving my contractors bad checks)

I'm not an attorney but I don't see how from my limited understanding of the UCC and Regulation CC a bank has any kind of right to do that. They could have refused to accept the check in the first place. They could have waited a day and sent it back, OK, but to actually present the check and get paid on it, then freeze my days latter funds seems absolutely corrupt. And who are they to then send the funds back to the maker of the check? Those were my funds once I deposited the check, not the banks and the not maker. If I tried sending $30,000 of the bank's money to a 3rd party I'd be sitting in a federal cell right now.

I've already reviewed this with an attorney (who admits he's not a expert in banking) and he's astounded at the banks behavior as I am. Question I have is, is there anything the bank can use to justify its actions?

I don't believe the bank has acted in good faith if things occurred as you have stated. I suggest a letter to the president of the bank asking that the fees be rescinded and your record restored. Include a detailed list of fees you've incurred at the hands of others, and suggest that the bank might consider making you whole on that score, too.

I don't think there is justification for this bank's actions if you have presented the facts fairly.

The fact are exactly as stated. As far as a letter to the bank president goes, well, I'm afraid its well past that. The bank is a large multi state one and they have been quite unyeilding in maintaining that they were permitted to do this, they they have yet to tell me what law or regulation gives them this authority.

If they are unwilling to listen, then perhaps a copy of all correspondence being sent to their regulator as well. If you file a complaint with the regulator, the bank is required to answer that.

If you are unhappy with the results you are getting send a detailed letter to the bank's regulator. That will get someone's attention. Good luck.

I would say mail the letter to the regulator with a copy to the President's office.

No need to be coy about whether or not you are sending a letter to the regulator.

What state is the bank based?

If it's a multi state bank - I'd try a regional executive. Do you a have local "Mr. Action" consumer type person who airs questions like this in the local paper or local TV - I'd copy him/her too.

Big banks really hate negative publicity. contact your local TV news department. When the local talking head starts asking questions, they will ususally cave in rather than risk some other problem coming to the surface, or a class action suit due to all the puplicity.

How do you find out which regulator is for which big bank?

Click on Banking Regulators .

If you reviewed this transaction with your banking center manager, and had the clients in tow, I'd be a little peeped right now - where is he/she in this whole process?

I'd be saying fix it, refund it, apologize for it, and good bye - and pretty soon everyone in town would be hearing from me how they do business. I'm assuming of course that the transaction went down exactly as you say - because it sounds as if you did everything you could think of!

The branch bank manager was completely backing me up through the whole time. However he pretty much said that anything he says or does can easily get overruled by the home office and the fraud department.

By the way the bank is headquartered in Minnesota and spends all lot of money on ads trying to attract new customers. I can only assume its to get NSF fees of them because it doesn't try very hard at keeping them!