AC Payee only cheques cashed by high st shop

So that the Bank does have to take responsibility.

Go back to them and escalate your complaint until you reach a person who does know the rules

tim

How do these cheque cashing shops work then, since virtually all cheques are crossed AC payee?

Here's an example:

-they are happy to take crossed AC payee cheques. I thought all they had to do was get proof of ID, ie that the person presenting the cheque is the person the cheque is made out to. Maybe they "open" a temporary account?

"Account Payee or Restrictive Crossing This crossing can be made in both general and special crossing by adding the words Account Payee. In this type of crossing the collecting banker is supposed to credit the amount of the cheque to the account of the payee only. The cheque remains transferable but the liability of the collecting banker is enhanced in case he credits the proceeds of the cheque so crossed to any person other than the payee and the indorsement in favour of the last payee is proved forged.The collecting banker must act like a blood hound and make proper enquiries as to the title of the last indorsee from the original payee named in the cheque before collecting an 'Account Payee' cheque in his account."

From

Beware that it isn't clear to which country the Wikipedia text refers.

Theo

They work by taking the risk of being sued in case they give the money to the wrong person. They either have insurance for this, or they self insure, funded by the fees they charge.

So does the crossing mean that the collecting banker need only make sure the money goes to the right person, or must it be to *a bank account* in the name of the right person? The words clearly seem to mean the latter, and the drawer would normally expect them to mean just that, and by giving the money to someone in cash the cashing shop is committing a technical irregularity. The question arises whether in law this irregularity is enough on which to sue, or whether having made sure they gave the cash to the right person (which in this case they clearly did) is a valid defence.

The shop can give cash to anyone for the cheque. It's the *bank* which must pay it into an account. That account does not need to be that of the original payee, but it must be an account held at that bank.

The reason for this is that, by paying the cheque into an account, the bank can subsequently reverse that payment and regain the funds if the payment is challenged (for example, if the named payee complains that the cheque was stolen or otherwise illegitimately transferred). So both the bank and the original payee are protected against unauthorised use of the cheque by a third party. If a crossed cheque is used illegitimately by a third party, that party will be the loser if the original payee discovers the use and takes steps to reverse it.

By comparison, an uncrossed cheque can be converted to cash over the counter at a bank, and, if that conversion is done by an unauthorised person, neither the bank nor the original payee have any way to regain the funds. If an uncrossed cheque is used illegitimately by a third party, the loser will be the original payee.

Crossing a cheque, and the use of "A/C Payee", therefore, is not intended to prevent the legitimate transfer of a cheque from the original payee to a third party. Rather, it is intended as a safeguard against illegitimate transfer to a third party by providing a mechanism by which such a transfer can be reversed.

The risk to the shop which cashes a crossed cheque is that the person transferring it to them is not the original payee. If they cash a stolen cheque, for example, then the original payee can force the shop's bank to reverse the credit to the shop's account in order that the original payee may then be correctly credited with the funds. So the shop which cashes the cheque should, for their own protection, take necessary steps to ensure that they are giving the money to the named payee. If they fail to take sufficient precautions then they are not breaking any laws, but they will be in severe danger of being exploited in a way that will cost them money.

Mark

I think you are confusing &Co crossings with A/c payee crossings.

I believe, with A/c payee crossings, it is possible to name the bank, or even specify the account, specfically.

A cheque is a promise to pay. The builder does not claim he hasn't been paid so the banks are probably correct in claiming they have carried out appropriate procedures. If he subsequently come back and says he never received your cheque that's when this shop has to pay the money back to the issuing bank. It's why they are so careful in ensuring they get all the personal details of the person asking for the cash in return for the cheque.

If you didn't like his work why did you pay him? What do mean by "took your money"? It sounded like you freely gave it to him.

Even if the money had been paid into his account, there wouldn't be anything you could do. His bank wouldn't give you the money back just because you changed your mind about paying him. They'd tell you, quite rightly, to take action through the courts in the usual way.

Mark

That's completely irrelevent to the OP's problem. He has paid someone for some work, and then changed his mind and wants the money back (presumably because the work was either shoddy or not completed). His complaint, thereore, is solely with the person/organisation that he paid. The bank has absolutely nothing to do with it - even if the money had gone into the builder's account, the bank wouldn't return it just on the say-so of the OP. He needs to sue the builder, and, if he can't do that, then he's pretty much stuffed.

Mark

Reading between the lines, it seems to me that the builder persuaded the OP to part with money up front, perhaps "for materials", and then disappeared.

Your "even if" is a bit out of place here. There is no question in the OP's mind, I think, that if the money had gone into the builder's account, his only option would have been to sue the builder, he would have no recourse against the bank.

He seems to be hoping that because the banks disregarded his instruction (or what he thought was his instruction) to pay the cheque *only* into a bank account in the payee's name, that they could be liable.

It seems to him (and probably would to most normal people) that although the *usual purpose* of the instruction is to prevent the money falling into the wrong hands, the mere fact that the money actually did fall into the hands of the intended payee should not affect the position that the money was really paid without the drawer's authority (the authority having been limited to the circumstances noted on the cheque).

The OP seems to believe he can't sue the builder because, although he has managed to trace him, he "has no money". Hence trying to hang it on the banks for their technically irregular processing of the cheque.

If he is stuffed, he may as well get the satisfaction of bankrupting this character, and perhaps also pinning a criminal offence on him, since he would appear to have committed fraud.

The OP says "cheques" which suggests he's made several staged payments. You might make the first cheque out to cover initial materials but a sensible person would want to see work progressing satisfactorily before making further staged payments. This should all have beeen agreed at the outset. Too late now of course.

He is wrong, though, if that is what he thinks.

The relevent legislation (The Bills of Exchange Act 1882 and The Cheques Acts 1957 and 1992) explicitly removes any liability from the bank in such circumstances.

Indeed. I think he is probably wrong to think that there's no point suing the builder as, even if the builder has no money right now, a CCJ in his favour will allow him to pursue it by other means - including sending in bailiffs to seize the builder's property. Or, as you say, making the builder bankrupt, if necessary.

Mark

You may be right, but another possible interpretation of the plural is that several cheques, each no more than the cheque card guarantee limit, were issued to total a single but substantial initial materials outlay.

What's world coming to, eh, when even fraudsters distrust their victims, and ask them to make out several small cheques in preference to a single big one?

Some people do a runner after getting the initial deposit.

My point is that the bank has violated my trust placed in them and acted against my instructions by allowing my cheques to be cashed by a

3rd party.

When I started the project the builder wanted to be paid in cash but I totally refused and agreed to pay him with staged cheques. In spite of this he was always ahead of the game because he said that he needed money to buy raw materials for the next stage.He also said that the more pricey things like doors, windows and kitchen units had to be orderd early so they would be ready in time. When he put up the walls he started on the roof and quickly removed the slates replacing them with felt sheet and batons. He then asked for the next cheque which I was reluctant to give but he said that he needed money to buy the slates and crack on with the job. So I gave him the cheque which was drawn very quickly but he disappeared for several weeks. We thought he had gone on holidays. When he re-merged he was making execuses and would not continue with the roof. The reason he showed up again was that he had some money to collect from anoher customer in the area. Then he just disappeared, stopped answering my calls and would not open the door to me. I then found out that he had been made bankrupt by the Inland Revenue and he had no assets. So all that show of quick work on the roof was a facade to get that last cheque off me. He left the roof in a mess and in vulnerable situation. It is costing me a lot of money to rectify the mess and get the roof finished for winter. The rest of the work will have to be done over the next 2 years as I save up the money.

After making enquiries with my bank it has become evident that he had been cashing my cheques at cash-convertor type shops without having a bank account. Doing this way, he was able to shift money and evade detection by Tax authorities. I also heard that this was the 2nd time he had been declared bankrupt.

My argument is that having a bank account gives a certain amount of credibility and I certainly would not have dealt with this builder if I had known that he did not have a bank account or that he was cashing cheques in cash shops. Had my bank alerted me even the slightest that the cheques were not going to the nominees own account, I would have taken action in the early stages and avoided being ripped off. I may have been inclined to do research and found about his first bankruptcy.

Now when I write a cheque, I always assume that bank will honour 'AC Payee only' on cheques. It is an instruction and matter of trust that I place with the bank and I do not expect the bank to allow the cashing of the cheque through any 3rd party. I once received a cheque which I signed on the back and gave to my wife to put in her account. Even though she had her id, my id and various documentation to prove that I was her husband and that I signed on the back, her bank would not accept the cheque. I even went with her and signed in front of them but they refused. They said I had to present the cheque to my own account. Now if they are that strict with us individuals then why are they so laxed with these cash shops?

My bank, by cashing the cheques to a 3rd party, have violated my instructions leading to huges losses to me and they have aided and abetted tax evasion. My guess is that this builder has done around

90-100k of business in the last 12 months but has not paid a single penny of income tax or vat. It may have been the same prior to his first bankruptcy.

My bank is dodging all responsibility.