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Home >> My Bank Said ...
Bank Holds Paycheck as 'Punishment'
I have a direct deposit for my payroll from the state of Florida. This direct deposit goes in to my bank every Thursday at midnight as an ACH credit. I have had a few NSFs over the past week. I was -$127.00, so when I received my direct deposit, that would have brought my account positive after the bank took the $127 that I owed them. However, the bank said that the Federal Reserve has placed a ten business day exception hold on my direct deposit until it clears, due to my NSF activity. This cannot be legal. I have called and spoken to the manager, and he says this is their policy to punish me for overdrawing my account, so as punishment, the Federal Reserve is holding my paycheck: no way! This cannot be correct. My daughter is a banker, and has mentioned that this is in violation of Reg CC, and the Expedited Funds Availability Act. Is this true?
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 Although we removed the name of your bank, we will assure anyone who reads this Q&A that it is one of the largest banks in the country. If what you have said in your question actually represents what the bank told you, you have been given a load of complete and outrageous misinformation, and the bank in question and its representatives ought to know better.
Your daughter is right. Unless there is fraud involved, it is never permissible under Regulation CC or the Expedited Funds Availability Act for a bank to place a hold on funds deposited electronically by ACH direct deposit. A bank may delay availability of deposits made by check if its depositor has been repeatedly overdrawn, but there is no excuse for delaying your access to whatever is left of your direct deposit after the $127 overdraft was resolved.
Hopefully, that will resolve the matter. Then, look for another bank.
Published on BankingQuestions.com 5/26/10
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