If, for any reason, a consumer makes a purchase with a personal check that he or she regrets, and would like to return the item, or if a personal check is lost or stolen, they can stop payment on the check. When payment is stopped, the consumer can write another check without worrying that the lost or stolen check will be cashed if it is found.
The United States government regulates the reasons a bank may not honor a check in Section four of the Uniform Commercial Code (UCC). The responsibility of the bank as well as the account holder is given. The bank must receive the request within a certain time period. If the bank pays the check after the stop request was given, it must do so only if it meets the reasons that are stated in the UCC section. If this happens, there are also remedies for the account holder listed in the section.
The consumer should also call the bank and find out if the check has already been paid. If so, a stop request cannot be made. Since the payout may not be immediate, it may be possible to stop it even if the check has reached the bank. If the check has not been paid, the consumer need not supply any information about the recipient to stop the payment.
Banks usually charge a fee for a stop payments. Some fees are quite high, and it may not be worth stopping payment on a check for a small amount. If the check is large, for example, more than $100, it is probably worth paying the fee.
The main reasons for stopping payment on a check are:
• Defective goods – if the goods purchased are not what the consumer was expecting, are broken or damaged, or are not up to the standard he or she thought they were getting, and if the seller will not accept a return, the consumer may choose to stop the payment. For example, if a consumer gives an advance payment on a vacation package that turns out to be less than advertised, they may want to stop the payment on the check.
• Lost, stolen or replacement checks – if the check is large, the fee charged by the bank will usually be less than the amount of the check, so it is better to stop the payment on a lost or stolen check. If the whole checkbook is lost, the consumer should immediately inform the police and close the account. The bank may flag the account for special attention. Many banks will give the customer a new account number. If the receiver loses the check, and the purchaser needs to give a replacement check, the purchaser will want the payment stopped on the original check.
• The account has insufficient funds – consumer may expect their bank accounts to contain a higher amount than it actually does. This could be because of faulty record keeping or because a deposit did not yet reach the bank. The consumer must find money to deposit quickly or stop the payment on the check. If the check reaches the bank, the consumer may have to pay a large insufficient funds charge.
As soon as the consumer decides to stop the payment, he or she should call the bank and request that payment not be given for a particular check number. The bank may charge a fee for this. After the call, the consumer should send a formal stop payment request letter to the bank.
Calling the bank gets the payment stopped sooner. The consumer can check the bank’s website to see if the process can be started online. However, in most cases, the bank will still require a formal request in writing to verify the stop payment because the order given over the phone is only valid for 14 days. Even with the request in writing, it will only be valid for six months. If the consumer thinks after that time, someone may try to cash the stopped check, he or she may need to make another request.
The letter must have the proper date and check number and be addressed to the bank manager or a specific contact person if known. All of the information related to the check should be included in the letter such as, the date of the check, the check number, the amount and to whom the check was written. The letter may also contain an authorization for the bank to deduct any fee from the consumer’s account for the service.
In some cases, it may not be possible to stop the payment on a check. There may not be time or the account holder may not be able to call the bank in time. If this is the case, it is recommended for the consumer to call the payee directly and request that they do not deposit the check. They may be able to arrange for another form of reimbursement.
By Andre Bradley