When is a Bank Liable for not putting a hold on a check that resulted in a huge overdraft?

Asked over 1 year ago - Minneapolis, MN

Say a customer with 16 dollars in his acct deposits a 2000 dollar check, spends some before the check clears and then the check bounces putting the customer in the negative almost 2000 dollars. The bank says he is liable for the funds... Does the bank have ant responsibility to the money because REG CC governed by the FDIC wasnt followed.

First of all a hold should have been placed on the check bc it was from out of state and a large amount. A hold should have also been placed because the customer didnt have.matching funds to deposit the check - ie he didnt have 2000 in his acct to cover the check if it bounced.

Because the teller didnt do her job the check wasnt held. A proper hold would have made 100 dollars available first day so when the checked bounced the cust would have only b

Additional information

*Customer would only be in the negative 100 dollars and not 2000 dollars.

Attorney answers (3)

  1. Answered . Reg CC repeatedly uses the language of maximum time periods of unavailability: ". . . shall make funds deposited in an account by a check available for withdrawal not later than . . . ." If an institution wants to make the funds available earlier, it is not prohibited from doing so by banking regulations.

  2. Answered . This is a repeat post.

    Twin Cities & St. Cloud, Minnesota licensed attorney, Tricia Dwyer, Esq.: Phone 612-296-9666. CIVIL LAW, FAMILY... more
  3. Answered . Unfortunately, the depositor of the check is probably liable. Generally, a bank issues is customers a provisional credit for a deposited check. In other words, the never actually represent to you that the check has cleared, there is a hold on the check, but you are being provisionally credited for the funds. As the account holder, you are supposed to be on notice that the check may bounce, or be fake, etc. There are a number of ongoing scams out there like this, people offering to hire you, put checks in your account for them, and write them a check against your account, with some even showing what appears to be a cashier's check (that is fake). But in those cases, the customer who writes the check is still liable.

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