What Happens When a Check You Deposited Is Returned?
Deposited checks typically become available in stages. A portion may be available right away, while the rest becomes available after a waiting period.
People often interpret that waiting period as the time your bank or credit union needs to confirm that the money is actually there. However, those waiting periods are governed by banking regulations and financial institution policies and are not an indication that the check has been paid by the bank it was drawn on.
That means it is possible for a bank or credit union to reverse the deposit, even after the full amount has been added to your account.
Why Would a Check Be Returned Unpaid?
A deposited check can be returned for several reasons, but not limited to:
The person or business that wrote it does not have enough money in the account
The account has been closed
The check writer placed a stop-payment order
Account or routing information is incorrect
The check contains a signature or other processing problem
The check has been altered, forged, or associated with suspected fraud
Why Are Any Funds Available Before a Check Has Fully Cleared?
Federal funds-availability rules generally limit how long banks and credit unions can hold deposited checks before making the money available.
The check-clearing process and the funds-availability schedule do not always finish at the same time.
As a result, some or even all of the money from a deposited check may become available before the paying bank has finally honored it. If the check is later returned unpaid, the financial institution can reverse the deposit even though the funds had already appeared available in your account.
What Happens If the Check Is Returned?
If the paying bank does not honor the check, it is returned to the financial institution where you deposited it.
Your bank or credit union can then remove the amount of the returned check from your account. If the money is still sitting in the account, that may simply bring your balance back to where it was before the deposit.
If you have already spent the money, the reversal can substantially reduce your available balance and may leave the account overdrawn.
Account holders who find themselves in these situations should contact their bank or credit union as soon as possible. The depositor is still usually responsible for restoring the negative balance, but fee policies vary by financial institution.
Be Careful With Unfamiliar or Unexpected Checks
Do not deposit checks from people or companies you do not know without first verifying that the payment is legitimate. If you receive a check from an unfamiliar business, confirm the payment with the company using contact information you find independently and contact your bank or credit union if you are unsure whether the check is legitimate.
If the sender asks you to return part of the money, buy gift cards, send a wire transfer, or forward money to someone else, do not follow those instructions. That is a common fake-check scam.
Usually, the victim deposits the check, waits until some or all of the money becomes available, and then follows the sender’s instructions to send part of the money back through gift cards, a wire transfer, or another payment method.
When the original check is later returned unpaid, the bank or credit union removes the deposited amount from the victim’s account. The money already sent to the scammer is usually gone, leaving the victim responsible for the loss and any resulting negative balance.
What Should You Do If a Deposited Check Is Returned?
Start by reviewing the return notice and your account activity to determine how much was removed and whether the reversal caused your account to become overdrawn.
If you recognize the person or business that issued the check, contact them to find out why it was returned and discuss another form of payment.
Ouachita Valley Federal Credit Union members with questions about a deposited check or account activity can contact us at 318.387.4592 for assistance.
