Bank's liability

While admittedly not directly relevant to the current thread, looking at this the other way can the customer not equally say:-

How long is it advisable to wait before sending the check after receiving the goods (to check they work alright maybe?)?

I never quite understand the logic of sellers in private deals who feel that it's reasonable to wait for a cheque to 'clear' before sending goods. The buyer is at similar risk so the 'fairest' way to act always seems to me for both ends to send cheque/goods at the same time. OK, receipt of cheque isn't a guarantee of payment but the cheque will probably arrive quicker (letter v. parcel) so that just about cancels out.

| > | > 1. How long is it advisable to wait before despatching goods against banked | > cheques? | > | While admittedly not directly relevant to the current thread, looking | at this the other way can the customer not equally say:- | | How long is it advisable to wait before sending the check after | receiving the goods (to check they work alright maybe?)? | | | I never quite understand the logic of sellers in private deals who | feel that it's reasonable to wait for a cheque to 'clear' before | sending goods. The buyer is at similar risk so the 'fairest' way to | act always seems to me for both ends to send cheque/goods at the same | time. OK, receipt of cheque isn't a guarantee of payment but the | cheque will probably arrive quicker (letter v. parcel) so that just | about cancels out. | | -- | Chris Green |

What are you, brain dead?

This customer attempted to commit fraud by exploiting the known delays in the banking system that I have described in my OP.

Anyone have a sensible answer to this problem?

Grobag

That's uncalled for.

Chris has made the valid point that, generally, although the seller is at risk of the buyer's cheque bouncing, the buyer is also at risk of a seller fraudulently either sending junk which doesn't work, or indeed of not sending anything at all.

Use paypal :-((

Ask the collecting bank (yours) to contact the drawee (that's the buyer's bank) to enquire whether the cheque "is paid". If they say yes, it cannot bounce.

Or don't take cheques. Ask your customers to send the money directly to your account, e.g. by online banking.

But bear in mind that this sends a signal to your customers that you don't trust them, which will, in turn, set them wondering why the hell they should trust you. That's where Chris came in.

Lots of organisations are now stopping accepting cheques. And no doubt there will be a vicious circle as the fraudulently inclined find their range of targets narrows and so the proportion of fraudulent cheques increases.

i asked our account manager this same question ages ago. he said 6 working days should cover it.

but clearly not in this case.

apparently, there are unnecessary delays such as the unpaid cheque being posted back to your bank, then posted on to you.

9 days is a bit extreme though. maybe your account manager could throw some light on this

you don't stand a chance. your bank will just blame some anonymous processing centre then point you to a ream of terms and conditions which you have signed up to indemnifying them for everything.

are these business-to-business transactions? has an explanation been given by the person owing you money?

it looks a bit bleak when the cheque is stopped, however. RDPR cheques still have a chance of going through.......

Not so clear. Middle of 11th plus 6 working days gets you to middle of 19th. That's when the bank posted the letter.

Still, 6 working days is outrageously long. The clearing cycle is much shorter than that, isn't it?

The OP has the guy's address (since he posted goods to him) and he has the cheque. He should write one "last chance" letter to the guy and if satisfaction is not immediately forthcoming, go straight to court (Small Claims). Sue on the cheque, and a win is guaranteed, because stopping a cheque is illegal.

Actually, it might be better not to bother with Small Claims, and use the full slow-track procedure and hire an expensive lawyer to deal with it, whose costs will be added to the claim, to teach the bastard a lesson.

In message , Grobag writes

Hmm that is a couple of days too long.

I would wait 7 working days if you paid it in at your account holding branch and 9 if you paid it in elsewhere. The safest way is to get you bank to ring the drawee and ask if the cheques has been 'paid'. DO Not ask them if the chequer has 'cleared' as you will get a misleading answer.

Yes, the drawee should only bounce the cheque on the day it is presented or the next day (exceptionally). If they bounced it outside of those limits then I would say you could sue them.

The delay could have been caused by other things, such as you paying it in after 3.30pm (this may cause a days delay). The cheque was bounced on the day after presentation (which adds a day) the cheque is posted by the drawee to the collecting bank first class, this could take a few days. It then has to be posted to you, but it seems that was delivered the next day. If you paid it in at a branch other than your own branch then it has then to be posted to them before it is posted to you, possibly adding two days.

In message , Ronald Raygun writes

Is it? Since when? Have I had a senior moment and missed something?

You know what I mean. Stopping a cheque is OK if the cheque is lost or stolen and if a suitable alternative arrangement has been made with the payee (such as issuing a replacement cheque, or such as having agreed after the cheque has been given to the payee that you wanted to alter the amount, and so rather than write another cheque for the difference, which would mean he had to pay in two cheques (perhaps incurring an extra fee), that he should simply tear up the original and you would get another for the revised amount to him - in this case it's safer to stop the "torn up" cheque in case the payee "forgets" to tear it up, and finds it languishing in his wallet weeks later and "thinks" he's still due it).

But stopping a cheque which has been given, and been accepted in good faith as equivalent to cash, is illegal. That's a suitably woolly term which avoids saying whether I actually mean a mere tort or the full criminal monty. That it is at least the former is something you do not dispute, is it? And that it can be the latter (i.e. fraud) in some circumstances, such as if there is already in the writer's mind the intention to stop it at the moment he is writing it, you wouldn't either, would you?

OK thanks for all the comments guys. From some of the responses it looks like people thought we were selling an item on eBay. Not so, we are running a business here, and our product sells for over 100. We take credit/debit cards but some customers prefer to pay by cheque. With all the 'distance selling' and internet commerce these days there are numerous fraudsters trying it on out there, and we ourselves have been done once or twice. However we do like to keep it to a minimum!

Occasionally a ccd payer will deny placing the order, and the card company always gives them the benefit of doubt if it was a phone order (i.e. no signature). To minimise this we now, as do many firms, only despatch goods to the cardholder address.

As I said before, stopping the cheque, or writing one with insufficient funds, or on a closed a/c, with the intention of relying on the known delays in the banking notification system to acquire the goods for free, is of course an old and well known con trick. The purpose of my OP was to ask for advice on defeating this, without keeping the customer waiting an unreasonable time for his goods.

I would not want to rely on a verbal statement on the phone from a bank as was suggested. Oh well, just have to wait 2 weeks before despatching against a cheque in future.

Grobag :-(

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i think it is something like:- day 0 - pay cheque in day 3 - paying bank have until midday to decide not to pay cheque unpaid cheque then posted (!) back to your bank day 4 - your bank receives if first class post works (!) your bank posts it to you with letter confirming bad news day 5 - you receive bounced cheque

So, if the first class post is late on 2 occasions, 7 working days can elapse.

it is an awful system. i look forward to the day when cheques are scrapped

slightly unrelated but i understand that a dishonoured cheque in India will result in the signatory being arrested and held in prison until the payee has been paid.

sounds like a good system.

a similar thing happens in sound middle-eastern countries if your business goes bust. you can be held in jail until any debts have been satisfied. so no chance of skipping the country leaving your creditors high and dry

You don't need to go all the way to India. Word on the street is that France is pretty tough on this sort of thing too.

It's utterly arcane to involve the postal system in the cycle. Interbank communication should be electronic. Since cheques are mostly OCRed in the branch where they are paid in, even allowing for the whole day's business to be batched up (as opposed to each cheque being processed all the way to the drawee instantly) we have the technology to shorten the whole cycle to next morning. And customers who are victims of bounced cheques should be given the option of being notified quicker than by post too.

But just because the clearing system is deficient, don't blame cheques. They have their good points, though I think we probably should expect to see increased use of direct account-to-account transfers.

No its not. Which law is that then?

Ahh!

That would certainly be illegal.

I dont think are OCR just yet, I believe the old manually encoded system which puts the amount at the end of the row of magnetic characters at the bottom of the cheque is still the system..

Truncation has been available for years and years but there is a huge inertia in the banking system BUT the plans are now approved by all and I think you will see big changes soon.

In message , Grobag writes

Thats up to you, but it is a formal bank procedure used extensively by banks themselves when deciding whether to payout against uncleared effects. The collecting bank asks the drawee if the cheque is paid by phone. Both parties record the details of the conversion in a register, If the cheque is physically present at the drawee (which may not be the case) the cheque will be stamped paid and the details of the phone call recorded on it. The collecting bank obtains the name of the clerk at the drawee and records that. If the cheque is subsequently returned unpaid the collecting bank will refuse to accept the unpaid item and would return it to the drawee without debiting your account

Try the above procedure, it works.

"john boyle" wrote

The problem is, how does the customer know that the bank has *actually* gone through that procedure?

The person on the phone at the collecting bank might be one of those untrained clerks that doesn't know what they are doing, and so doesn't apply the above procedure properly, and so the cheque is not "paid" after all - even though the untrained clerk comes back and says: "yep, that cheque is now paid sir. Have a nice day!"

What can the customer do in that situation - especially if the clerk subsequently denies having said "paid", and says that they only said "cleared"?!

In message , Tim writes

True, and the letter sent by the bank as an alternative to the above (suggested recently) could have prepared on a word processor using stolen bank stationery with a forged signature

He he!