I deposited a check from a customer in my business account. I received a letter from my bank stating that the funds from this check would be on hold for three-four days, and they disclosed when the funds would be available. They also said that even after the clearing date, it is my responsibility to see if the check gets returned or canceled. Why did they put my funds on hold if I am still responsible after the hold time for the check I deposited?
I verified that the funds were in my account after the hold was taken off of the check and used those funds to make a payment the following day. The day after I made the payment the bank informed me that the check was forfeited and that I am liable to cover the funds. They charged back my account and now it is overdrawn. What are my rights? What should I do now?
Your rights are limited. It sounds as though you deposited checks into your account. Your bank then placed what is known as a Reg CC Hold, which is in accordance with the Expedited Funds Availability Act. This law limits the amount of time a bank is allowed to impose a hold, restricting your use of the funds. Prior to this law (and its implementing banking Reg CC) banks could hold a deposit as long as they wanted. The law is meant to help consumers and the time a hold is allowed is supposed to correlate to the time it will take to get to the bank it is drawn on. Unfortunately, it doesn't always work that way. Good counterfeit checks may have to be seen and held to be examined by the bank it is drawn on or by the account owner, to know if it is legitimate or not. This is absolutely not allowed for in the Reg CC time lines.
When the bank the check is drawn on say it is a counterfeit, they then don't give that money to your bank. Your bank then takes the money back from you, reversing the chain the payments followed. You are then left holding the check and are expected to go after whoever gave you the bad check.
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Your rights are limited. It sounds as though you deposited checks into your account. Your bank then placed what is known as a Reg CC Hold, which is in accordance with the Expedited Funds Availability Act. This law limits the amount of time a bank is allowed to impose a hold, restricting your use of the funds. Prior to this law (and its implementing banking Reg CC) banks could hold a deposit as long as they wanted. The law is meant to help consumers and the time a hold is allowed is supposed to correlate to the time it will take to get to the bank it is drawn on. Unfortunately, it doesn't always work that way. Good counterfeit checks may have to be seen and held to be examined by the bank it is drawn on or by the account owner, to know if it is legitimate or not. This is absolutely not allowed for in the Reg CC time lines.