Check Acceptance Procedures

CHECK ACCEPTANCE POLICY

GENERAL INFORMATION

The procedures below are to be followed by all employees.

PERSONAL AND BUSINESS CHECKS:

• Any check $5,000 or more must be approved by a Supervisor or person-in-charge. If neither is available, a hold must be placed until the check is approved.
• Third-party checks will not be accepted since we cannot verify the original endorser’s signature.
• It’s acceptable to take a check if the member is applying the entire amount to a loan payment. The payment can always be backed off the loan if the check is not good.
• Two-party personal checks for over $200 will not be cashed. Suggest to the member that they take the check to the bank it is drawn on or a hold will be placed on the funds.
• Reg CC states the first $200 must be made available the first business day after the deposit. However, DNA releases the $200 immediately.
• If a check looks suspicious, get your supervisor!
• No third party personal checks are accepted, without Supervisor approval or the approval of a “senior” Teller.
• Supervisor approval needed if member does not have Identification with them.

CREDIT UNION CHECKS (ON-US)

• Checks drawn on the Credit Union presented for either full or partial cash back must have a Guarantee message placed on the drawer’s account. Refer to the On-Us Check Procedures section in the Teller Reference Manual for instructions on how to place a Guarantee message on a check. Checks drawn on uspresented for deposit are processed as a regular check. Corporate checks do not follow this rule and are processed as a regular check. Any exceptions to this policy must have supervisor approval.

• The employee must know the person presenting the check. If not, the expiration date and the ID number must be written on the Credit Union’s copy of the receipt. Never write a person’s Social Security number on a check!
• If the person is not a member and the check is for $1,000 or more, check the non-member against the OFAC list using the website:
• Anytime a driver’s license is given for ID, the number must be written on the Credit Union’s copy of the receipt, along with the expiration date.
• Any check $2,000 or greater must have the maker’s signature verified before cashing. A copy of the verification tool (ID, membership application) must be kept with the Teller’s daily work. Use the following order of verification:

1.Use Nautilus to search for the latest membership document. Attach a copy of the membership application to the back of the check.

2.Contact the member. Write on the Credit Union’s copy of the receipt the date and time of the phone call, and teller initials.

• Non-member’s cashing on-us checks must do so in the lobby of all branches. A copy of their driver’s license must be taken and kept with the teller’s daily work.

• When a non-member presents an on-us check for cash, and the person only has a student ID, the student ID must have a picture along with their signature; a copy of the ID must be kept with the daily work.
• Non-members are charged a $3 fee for cashing on-us checks.

CHECKS PAYABLE TO CASH OR THE CREDIT UNION (FOR CASH)

• The person presenting the check for cash must sign the back of the check.
• Always check Identification. The expiration date and ID number must be written on the Credit Union’s copy of the receipt. Never write a person’s Social Security number on a check!

INSURANCE CHECKS

• All checks must be endorsed as made payable! There are no exceptions. Insurance checks will come back without the proper endorsement.
• They cannot be stamped with the “absence of endorsement” stamp!
• Verify that all payees have endorsed the check correctly.
• Insurance companies will not accept a handwritten company endorsement unless it is written as follows: Bill’s TV, William Smith, President

POSTAL MONEY ORDERS

Care must be taken when accepting all Money Orders, as they are a common form of fraud. Below are the features of Postal Money Orders:

• Benjamin Franklin’s picture is repeating on the left of the money order when held up to the light.
• A thread appears when held to the light that says “USPS” throughout it. This thread is visible from the front and the back of the document.
• Eagle U.S. Mail Emblem is in the center of the money order.
• There will always be a clerk number.
• The person purchasing the money order is required to show a Driver’s License and fill out their address at the time of purchase. (Verify that their zip code is similar to the post office zip code.)
• The serial numbers will never be consecutive.
• The denomination of the money order is always printed in two spots on the front of the document.
• Domestic Money orders will not exceed $1,000
• International Money Orders will not exceed $700
• Canadian Money Orders will not exceed $1000

Postal Money Orders are subject to immediate availability per Reg CC

*Exception: If an employee doubts collectability or is suspicious of the item, an Exception Hold may be put on the account. Exception Hold Forms can be found under the Sav/Chk level on CUBE and must be approved by a supervisor. Give the member a copy of the form and retain a copy in your branch’s files for a period of five years.

What to look for to detect counterfeit checks:

PAYROLL CHECKS: Look for the following red flags:

Is the amount of the check an even dollar amount, such as $700? This is seldom the case for a payroll check.

Is the company well known? (Walmart, ShopKo, KI, Schneider, Kohls, etc.)

Is it hand-written? Typically, a well-known company would have a computer system to print their documents out!

Does the company name on the check match what we have on our system as their employer? This shows in the Identification area on the Teller Main Tab.

Look for errors on the check such as spelling errors or incorrect ZIP codes.

Look at the MICR line to match the routing number to the fraction at the top right corner.

Is there a date on the face of the check that shows when the account was opened, such as 01-08?

Were there new account warning messages?

Does the individual have a strong relationship with us? A $5.00 account balance does not constitute a strong relationship with us.

If any of these red flags appear, you must look at the following:

Look at the transaction history on the account at the member level. Are they cashing checks for the same amount on the same day or several days in a row?

When was the account opened? Was it within 30 days?

Contact the financial to verify the check is even good, even if the routing # is an actual financial.

Remember, we DO NOT have to cash all checks because they say “payroll.”

When in doubt, always check with a Supervisor.
CHECK DO’S AND DON’TS

GENERAL INFORMATION

Financial institutions are continuing to experience losses because of share draft (check) activity. Tellers are presented with a check for three basic reasons:

• To be cashed
• To be deposited
• For a loan payment

In each case, there can be problems. With a loan payment, the credit union could be returning “paid loan documents’ and the check proves to be worthless. The “scam” of depositing worthless checks into a new account and withdrawing funds before the checks could have cleared is also still occurring. Following proper policies may help the credit union avoid these losses.

DO’S

Be sure to check all of these points:

1. The check is complete and regular on its face.

2. There is no alteration of the amount or in the payee’s section.

3. The written amount and the number amount are the same. If not, take the written amount.

4. It’s not dated ahead of tomorrow’s date. (Post-dated) We will cash checks within 1 business day of the date printed on the check.

of the date printed on the check.

5. Is it properly endorsed? Is the endorser the person in front of you?

6. Be sure to know the endorser! If the person is not known, ask for ID and write it on the

Credit Union’s copy of the receipt.

7. If the check is a two-party personal check, put a hold on the funds. Exceptions can be made

by Supervisors only!

8. Any checks for $5,000 or more must be approved by a Supervisor or a person-in-charge. If

neither is available, a hold must be placed until the check is approved.

9. Verify the maker’s signature for on-us checks if the amount is $2,000 or greater. A copy of

the verification tool (ID, membership application) must be kept with the Teller’s daily

work. Use the following order of verification:

a.Use Nautilus to search for membership document

b.Contact the member.

** Follow the same step-by-step routine each time a check is cashed and make proper procedures

second nature!

DON’TS

1. DON’T accept personal checks from a non-member. There is no way to verify the

signature of a non-member! For example: third-party checks

2. DON’T cash post-dated or stale-dated checks. We will cash checks within 1 business day of the date printed on the check.

3. DON’T cash checks that are not properly signed and endorsed.

4. DON’T cash checks that have any type of restrictive or conditional endorsements.

5. DON’T cash a check made payable to a business. All business checks must be deposited

into their business account. If the member would then wish to make a withdrawal, they can.

6. DON’T cash checks that have been altered in any way.

7. DON’T cash checks endorsed with a rubber stamp.

8. DON’T cash checks endorsed “for deposit” or “for deposit only.”

9. DON’T cash any check unless you know the endorser!

10. DON’T accept the words “certified” or “guaranteed” as assurance of being a proper check.

11. Additionally, watch that the numerical amount and the written amount are the same. If the

amounts do not match, always take the written amount.

Every employee should understand that good judgment is just as important as good identification. A driver’s license is not an automatic passport to check cashing and even though the person CAN prove who he/she is, it doesn’t mean that the check should be cashed or deposited automatically.

Check cashing is a tricky area of the day-to-day operations of the credit union because it involves member service, trust, public relations, operational procedures, and security. When proper procedures become a routine, losses can be reduced.

A check from a personal bank account has ten parts.

ENDORSEMENTS

GENERAL INFORMATION

The act of endorsing a negotiable instrument is the equivalent of transferring title to it. Without the endorsement, title remains with the drawer. Therefore, endorsement is critical and is a major step in identifying the proper payee.

Always observe the document being endorsed. By witnessing the endorsement each and every time, you’ll be able to positively state that you know who received the proceeds of the item being endorsed.

Ask yourself these two basic questions:

1. Is the person presenting the item entitled to the funds?

2. Is there enough money to cover the item?

DIFFERENT TYPES OF ENDORSEMENTS

Blank Endorsement - Endorser simply signs the back of the check.

Double Blank Endorsement - Endorser signs the check and the second endorser simply signs to further endorse (John Doe, Jane Doe)

Conditional Endorsement - This type of endorsement imposes a condition. For example, the payee may endorse in the following manner: Pay to the order of John Doe when he graduates

If you are presented with a draft bearing a conditional endorsement, you should refer it to your supervisor.

Special Endorsement - This endorsement specifies the person to whom or to whose order the instrument is to be payable (e.g., “Pay to the order of John Doe, Jane Doe”)

Qualified Endorsement - This is an endorsement which frees the endorser from certain liabilities to subsequent holders-usually because he received no benefit from the check (e.g., “Pay to the order of without recourse”). The institution has no recourse to take should this item be returned. We should never accept drafts with this type of endorsement on the back!

OUT-OF-THE-ORDINARY ENDORSEMENTS

POA Endorsements - Make sure all of the required necessary documentation is received (e.g., a POA card or an actual POA document on file). Verify the POA relationship under “relations” on DNA.

Checks Made Payable to More Than One IndividualWith “AND” –

• If both payees are members and only one of the original payees has endorsed the back of the check, verify the signature and then have the other payee endorse it as well. The check can then be deposited into an account or cashed.

• If one of the payees is not a member, that individual must accompany our member to the Credit Union. Verify identification. A copy of the ID must be made and kept with the Teller’s daily work, and the ID number written on the Credit Union’s copy of the receipt. We will then accept the check to be either deposited or cashed.

ALTERED CHECKS

Altered checks derive their name from the con artist’s attempts to change (or alter) information already written or typed by the check maker. To detect the alteration, inspect the item carefully, looking for the following:

HANDWRITTEN CHECKS

Consistency in writing style - The slants, loops, lines, and spacing should be consistent throughout the written portion of the check. Capital letters tend to be approximately the same height, and lower case letters also tend to be of similar height. Usually, what appears to be an unbroken, even flow of the writing is also noticeable.

Consistency in ink - While inspecting for consistent writing style, also inspect the ink itself. Very rarely would a person use more than one pen to write a check or draft. Different pens will exhibit variations in exact shade of ink color. The point size on pens also differs. Differences like these will result in an inconsistency in the thickness of writing on the face of the check.

Consistency in shape - Are all of the letters rounded, angular, or a combination? Consider the size, height, and width of letters.

Consistency in spacing - Are the letters connected or are there breaks? How far apart are the letters from each other and between words?

Consistency in the stroke - Does the person write with a light or heavy touch? Watch for fuzzy or blurred letters, blots and blurs, erasures, and inconsistencies of handwriting strokes.

Non-writers - Some people may mark the signature line with an “x” and have it witnessed by a notary republic. Nursing home residents may find themselves in this situation.

TYPED CHECKS

Consistency in spacing - One or more digits may be added in the process of altering a check. This may be the result of a strikeover of the decimal point and the typing in of a second decimal.

Consistency in typestyle - Typewriters use different type styles and each instrument has small variations. This can result in very slight differences in appearance when more than one typewriter or font is used.

Consistency in evenness - If a check is inserted into a typewriter for a second time, miss-alignment between the original typing and the attempted alterations may result.

I have read the “Check Acceptance” policy and the “Checks – Do’s and Don’ts” policy, and understand its contents and implications.

Date: ______

Employee Signature: ______

Employee Name: ______

(Please Print)

Supervisor Signature: ______

6/12/15