I have heard this to be the case.
But exactly how does this work?
OK, you have a cheque, you cash it (these days the only means in the UK being paying into a bank account)... spend it. How effectively can it be clawed bank?
Axel
They just debit your account with that amount.
And if you have closed the account, they come after you for the debt.
The whole thing makes a mockery of the whole banking system vis-a-vis the customer. Nowadays in the UK, cheques payable to cash seem to be forbidden (or otherise unavailable). So cheques are not trustworthy means of transfering money.
But then, cash will soon be outlawed in any meaningful amounts.
Ah, well, Orwell was right even if off by 70 years.
Axel
In message , Alex Heney writes
Have you any evidence of this happening where the drawee was a Clearing Bank and the cheque was collected via the automated clearing by a Clearing Bank and the cheque was returned by the drawee later than the day after the cheque was presented for payment? (Apart from a fraud to which the payee was a criminal party).
In message , snipped-for-privacy@white-eagle.invalid.uk writes
As far as I can see, the occasions where a cheque has been returned unpaid ages after being presented seem mostly apocryphal, unless the payee was part of the fraud.
No, not at all.But for a third party to collect the cash you need to have made a prior arrangement with the drawee. But if you want the cheque to be negotiable between multiple parties then merely cross out the words 'account payee only' and write 'crossing opened' and sign by each alteration. You can then endorse the back. It will then potentially be a negotiable instrument, although it would be better to have a personal payee who endorses the back. Whether anybody will accept it as being worth something is a matter for them and the ultimate collecting bank would need to be very sure about how the ultimate holder of the cheque came to have it and the collecting bank would need to be happy that in the event of dishonour OR a claim against it by any other party to the cheque, that it cold reclaim its loss from the account holder who paid it in. Advice of dishonour would be advised in a few days, but a claim for conversion (which is a different thing) could take up to 6 years to surface.
Yes they are, just so long as understand the system.
Correct
Sadly correct too.
In message , S.P. writes
That is because (a) UK cheque clearing rules arent effective on foregign cheques, and (b) it ca take ages for the bank to get the euros from the drawee. None the less the drawee must either pay or dishonour the cheque upon presentation.
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