![]() ![]() It certainly stunned everyone that has heard my little tale so far. I’m hoping that readers who know of or have had similar experiences will pipe up in comments. My Check Misadventures. My bank is TD Bank, which is now the 8th largest bank in the US.*Earlier this year, I mistakenly put a check to my cat sitter in the payment envelope for my health insurer, Cigna. Not only did Cigna process the check despite the amount being vastly smaller than the amount shown on the little form sent back with the payment (as in someone had to key in a clearly different amount, hence look at the face of the check) but my bank made payment to Cigna even though the check was made out to “Jeannie A”. The only way I figured out what had happened was by weird happenstance.
Of course, Jeannie the cat sitter politely said she had not been paid. I was pretty sure I had paid her and the bank said the check to her had cleared, so I told her that and asked if she could have deposited it and forgot. She was not happy. I later got a bank statement that included an image of the processed check. I also got a monthly statement from Cigna asking me to pay a weird amount. Not trusting Cigna as far as I can throw them, I called the billing department to find out what was up. Members logging into MFCU@home agree to abide by applicable current user agreement. Attempted log in by unauthorized users will result in criminal and civil. Yves Smith Post author September 19, 2013 at 5:48 pm. No, TD Bank is not acting particularly abusive because its Canandian and thinks it can get away with it. The rep was able to pull a scanned image of the check they had gotten from me and told me the amount and that it was made out to Jeannie A. I was stunned that that could have happened. Fast forward. Earlier this week, I made out some checks, including one drawn on my personal account to the IRS (made out to “United States Treasury”) to pay my Federal income taxes due. I also wrote a slightly bigger check to me from my business account. Later the same day, I realized I had put the check on my business account made out to Susan Webber in the envelope to the IRS. Now in theory, either the Department of the Treasury or my bank should see the error and not process the payment since the payee is Susan Webber, not United States Treasury. But based on what happened last time, I realized the payment could go sailing through again. So I went to my bank branch in person to have them explain why the last check to the wrong payee went through so I could make an informed decision as to what, if anything, to do. The branch staffer I spoke to first wasn’t sure and brought over the “Store Supervisor,” Hisabel Santiago. Santiago said that the Treasury processed thousands of checks so she was sure they’d present my check to the bank. She said the bank would then pay it because they processed checks from the Treasury in bulk. I said something like, “Wait a second, you are telling me that you don’t verify the information on the check to see if the payment should be made? How can that be right? That check isn’t made out to the Treasury. You aren’t allowed to do that.”She said, and this is an exact quote: “We don’t have to obey the law.” At least a half dozen customers were within earshot and started staring at us. I said, “That’s not correct. I know something about bank regulation. You aren’t permitted to pay out to the wrong payee.”She repeated “We don’t have to obey the law,” more loudly that the first time. She added that if the payment went to the wrong party, it was between the payee (I think she actually meant funds recipient) and the account holder, and I could take them to court. I said, “You are telling me even with forewarning that you are prepared to make payment to the wrong party.” She said I could pay $3. I had no interest in doing. I said, “I have a business and when I bring checks to the teller to deposit, if there’s a small discrepancy, they refuse to accept the check.” Ms. Santiago said that was different, it was a business account (which of course makes no sense, since the payment that mistakenly went to Treasury was also drawn on a business account). During that discussion, I felt I had entered into the Alice in Wonderland version of banking. So can banks just make it up as they go? There no chain of endorsements between the payee and the person depositing the check, yet the bank insists it’s kosher. If it really doesn’t matter who the check is made out to if it winds up in the hands of a bulk processor, does any paperwork generated by the consumer matter if the bank arbitrates based on what is cheapest and most convenient for it? Effectively, we have two legal regimes in operation: one for the bulk processing of checks (for big entities) where anything goes, and one for small fry who have to dot every i and cross every t. For anyone who followed our coverage of foreclosure abuses, you can see the same pattern: a “might makes right” attitude; the prioritization of operational efficiency over integrity of processes; and most important, an open admission of flagrant disregard for the rule of law. Yes, Virginia, This is a Big Problem. Now my sending the wrong check in this case isn’t ultimately a problem (so please refrain from offering helpful ideas, I’ve already sorted this out with my accountant). But you can easily see from my two different screw- ups the sort of mischief it can cause. Remember, in most cases, people won’t realize the wrong party got the check until it is too late, like the first instance, with Jeannie and Cigna. So who gets hurt? The payee who it looks like got payment but really didn’t. I was convinced I had paid Jeannie and the bank’s records said so too. So she would have been screwed had I not got inquisitive about what looked like an error in my favor at Cigna. So the person who didn’t get the check intended for them is harmed. The person who wrote the check, either out of neglect (not figuring out what went wrong) or bad faith can tell them the check to them cleared and bugger off. The check- writer if the person getting the wrong check successfully deposits it and refuses to give the excess over what they were due back. You can see what a nightmare this is. What if the person got extra money refuses to return the overpayment or drags their feet about giving it back? People or businesses who are cash strapped could really suffer even if the other party is honest but slow to get the money back. Is This Kosher? To get a sanity check, I spoke to Walker Todd. Todd worked for the New York Fed as an attorney and later the Cleveland Fed as assistant general counsel and research officer. He has since (among other things) taught law, history and economics at the graduate level, and is a research fellow at the American Institute for Economic Research. His initial reaction was to get exercised about the size of the stop payment fee. He thought the cost to the banks of stopping a check is well under $5 and questioned the policy justification for allowing banks to charge such high amounts (stopped check charges used to be on the order of $1. I said I though the bigger issue was the consequences of the depositor’s money winding up in the hands of the wrong party, particularly if the check that went astray was large. Todd said that the banks had the right to reverse a payment made in error, but they weren’t usually willing to do that. I also contacted a law professor who is an expert in banking and the Uniform Commercial Code, who asked not to be quoted by name since he did not have a hard copy of the UCC with him to double check, and it has a lot of oddities hidden in is comments. His quick and dirty response: Here’s the answer: First, are you sure your check was presented as a check, rather than as an ACH item? A lot of checks are now converted to ACH. If it was converted to ACH, different rules (the NACHA rules and possibly EFTA/Reg E) apply. Here’s the rule: UCC Article 4 (4- 4. It was only properly payable to Susan Webber. That means Treasury was not a “person entitled to enforce” the check. The bank should recredit you promptly and to the extent you were hit with fees, etc. Your bank might have an argument that you are precluded from raising the issue because of contributory negligence, per UCC 3- 4. So, I don’t think they really have a viable contributory negligence defense. The bank should be able to recover from Treasury. Treasury violated its UCC 3- 4. PETE (and if there was an intermediary bank, the UCC 3- 4. Susan Webber as payee wasn’t authorized). In the modern checking system, human eyes rarely look at checks. Most small dollar checks are never examined, while largely dollar checks tend to be sampled. The cost of being careful outweighs the cost of dealing with mistakes. The “we don’t have to follow the law” line is just ridiculous BS. Policy Issues. I have a sneaking suspicion this sort of mistake happens more than people want to admit. But until my rash of goofs this year, I’d blithely assumed that a misdirected payment would not go through. In the 1. 99. 0s, I had an account at US Trust, and I’d occasionally get calls as to whether to pay particular checks because they thought my signature didn’t look right. Thus not all that long ago, banks were monitoring check processing to make sure the payments made were valid. Of course, having the bank do what you assume would happen, that it won’t pay out on a check that gets in the hands of the wrong person, will mean you’ve got a missed payment somewhere, but you don’t have the additional complication of having to do forensics to figure out what went awry, unscramble financial eggs, and in a worst- case scenario, lose the money or have to engage in a pitched battle to get it back. If you’ve made or know someone who has made a mistake like this, please tell your story in comments, including the bank name and roughly when it happened. The reason for seeing if this is indeed a real problem is that in an odd bit of synchronicity, the Fed is soliciting input on how to improve the payments system, so comments on this post could help inform a submission to the Fed. In addition, it’s also curious that the CFPB seems to be missing in action. Classifieds - Michigan Credit Union League. Classified ads are a FREE service provided exclusively to affiliated credit unions. Each ad is eligible for one listing in the weekly Michigan Monitor newsletter with the full text posted for about 3. MCUL & Affiliates website, unless canceled earlier. We reserve the right to edit all ads for space, style and clarity. The deadline for the following week's Monitor is noon on Friday, unless Friday is a holiday. All ads are full- time unless otherwise noted. Submit ads to: publications@mcul. Member Services Associate, Alloya Corporate FCU, Southfield . Responsibilities include assisting member credit unions with account inquiries, providing information on Alloya’s products and services to members and processing transactions as necessary. The ideal candidate will possess three to five years of similar or related experience. Previous customer service experience required, credit union or banking experience is preferred. Alloya offers a business casual work environment and offers competitive benefits and salary. To apply for this position, email resume and salary requirements to careers@alloyacorp. Alloya Corporate FCU (Alloya Corporate) is a financial institution which provides investment, financial, lending and correspondent services to over 1. United States. Additional information can be obtained here. Network Database Specialist, Zeal CU, Livonia . The primary purpose of this position is to assist the credit union in achieving its service mission of building trusted relationships by providing members with superior financial solutions and outstanding service. In addition. For more information and to apply click here. Part- Time Tellers, OUR CU, Locations TBD . The qualified applicants will be responsible for providing excellent member service with a high attention to detail and quality work with both members and non- members. These positions will be responsible for posting a variety of transactions such as deposits, withdrawals, loan payments, cashier’s checks, money orders, shared branching, mail payments and night deposit transactions, etc. They will be responsible for understanding the basics of all of the credit union's products and services in an effort to better members' financial situations by cross- selling products and services. The ability to multitask at having conversations with members and processing transactions in the system is a key component of these positions. Effective communication and the ability to project professionalism in words and deeds are also necessary for success. The applicants must have a high school diploma or equivalent, at least six months of prior customer service and cash handling experience. Prior teller experience is preferred. If you are interested in one of these positions, apply by sending an email with your resume to HR@ourcuonline. Part- time Teller. Teller, OUR CU, Royal Oak . The qualified applicant will be responsible for providing excellent member service with a high attention to detail and quality work with both members and non- members. The teller will be responsible for posting a variety of transactions such as deposits, withdrawals, loan payments, cashier’s checks, money orders, shared branching, mail payments and night deposit transactions, etc. The teller may handle additional member service functions such as data/address changes, ordering checks, assist with card or online banking questions, etc. They will be responsible for understanding the basics of all products and services in an effort to better members' financial situations by cross- selling products and services. The ability to multitask at having conversations with members and processing transactions in the system is a key component of this position. Effective communication and the ability to project professionalism in words and deeds are also necessary for success. The applicant must have a high school diploma or equivalent, at least six months of prior customer service and cash handling experience. Prior teller experience is preferred. If you are interested in this position, apply by sending an email with your resume to HR@ourcuonline. Teller. Mortgage Manager, Gerber FCU, Fremont . The ideal candidate will be enthusiastic, have an understanding of the procedural requirements of mortgage originating, and have proven ability to be successful in a fast paced environment. They are seeking an experienced mortgage manager who welcomes the opportunity to be able to connect with realtors and builders, and provide helpful information to members as an integral part of the credit union's mortgage lending program. The ideal mortgage manager candidates will need to have some combination of the following requirements: an associate’s degree or completion of a specialized course of study at a business or trade school along with additional college coursework in business or finance, preferred; a minimum of three years of mortgage originating experience with knowledge of mortgage loan policies, products, processing, underwriting guidelines and knowledge of state and federal laws governing real estate lending; and effective and proven outside sales techniques and closing strategies. A NMLS ID # required. In return Gerber FCU currently provides an outstanding benefits package including a robust 4. Qualified candidates should apply on- line here by August 1. IT Specialist, Saginaw Medical FCU, Saginaw . The selected individual will be responsible for providing technical support for all credit union systems and troubleshooting problems that may arise in the systems. Further duties include, but are not limited to: providing leadership and overall direction in the area of computer systems, communications and overall security; network administration; acting as the support between information systems and end users; and monitoring, operating and assisting in the operation of computer hardware, software and peripherals. The qualified applicant must possess strong problem- solving skills, be proficient in Microsoft Office and possess a strong knowledge of networking, firewalls and security. An individual who has financial institution experience as well as computer, network and security certifications is ideal. Five to seven years of experience is required. To apply, send resume to hr@smfcu. Accounting Specialist, Dow Chemical Employees' CU, Midland . The qualified candidate will, under general supervision, record and review financial transactions, process invoice payments, support month- end reporting, and process automated clearing house (ACH) and share draft transactions. This position requires a high school diploma or general education equivalency diploma , with 3. Two to four years of general business experience with at least one year of experience in an accounting or ACH environment is also necessary. Accredited ACH Professional (AAP) certification is preferred. For more information and to apply click here. Mortgage Loan Originator, Astera CU, Lansing . If you love building relationships with people, thrive on the challenge of making sales and are looking for unlimited earning potential this is the perfect job for you! The primary duty of this job is to generate new mortgage business through various channels such as outbound sales calls, branch and call center staff, real estate agents, builders, developers, title companies, etc. This individual will be customarily and regularly engaged away from Astera’s places of business to conduct this sales activity. This individual will be responsible for maintaining a high level of service and confidentiality, having an in- depth understanding of mortgage loan programs offered, and ensuring credit union policies and secondary market requirements are being met. All of these tasks are necessary to achieve the credit union’s mission and strategic goals. The qualified applicant will have: an associate’s degree in business, communication, public relations or related field, or an equivalent combination of training and experience; two to five years of similar or related experience in mortgage origination, secondary market underwriting, sales, and regulatory compliance; familiarity with both conforming and non- conforming mortgage underwriting; and existing local real estate market contacts and relationships are highly preferred. This is a full- time, salaried, non- union position. The compensation structure for this job includes a base salary in the range of $4. The earning potential is literally unlimited. Astera CU offers an outstanding benefits package which includes health, dental, vision, 4. AD& D, short- term and long- term disability, FSA, EAP, tuition reimbursement, paid time off, paid holidays, and longevity bonus. Hours of work vary between the hours of 8: 3. Monday through Friday. Occasional evening and weekend work may be required as job duties demand. To apply click here. To learn more about Astera CU visit their website here. Consumer Loan Officer/Indirect Lender, Preferred CU, Grand Rapids . The ideal applicant will have at least two years of consumer lending experience. Responsibilities will include promptly reviewing and processing all faxed or system generated (DILLS) loan requests from approved dealers, reviewing credit reports, calculating debt to income ratios, determining collateral values and approving or denying loan applications within authorized limits. Additional responsibilities could include processing and funding loan applications approved by the credit union and reviewing packages to ensure that all conditions and documents are included, as well as assisting other consumer loan officers. Applicants must have the ability to multi- task in a fast paced environment, excellent oral and written communication skills and computer literacy. Preferred CU has an excellent compensation and benefits package. To apply send resumes to HR@preferredcu. Teller, Alliance Catholic CU, Troy .
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