What rules govern what a bank must accept for deposit in the US?

Question

I have specific scenario to tee up a general question. I was issued a check from a mail-in rebate program. This check was self-printed. I got a link via email and printed a check on A4 paper at home. The check is issued from APFCO from a rebate program from pet medication. Both the printed check and their FAQ say that this is a legal check.

My bank refused to accept the check for deposit in person. The clerk claimed that they wouldn't take it for mobile deposit either. The clerk spoke to his manager and also called HQ. He claimed that it was not acceptable because the check scanner wouldn't feed it. After talking to HQ he claimed that the legal department issued the policy. The clerk told me to cash it at my local big box store, but they would charge a fee for that.

I attempted mobile deposit after leaving the bank and it was apparently successful, it may be a few days before that clears and shows up in my account.

I have significantly more on deposit with this bank than the check is for. I would assume that this would mean that if the check were bad that the bank would not be out any money.

This specific scenario brought up a general question: What laws or typical conventions cover what a bank may or must accept for deposit?

What options do I have to solve this problem?

Is the check issuer on correct legal ground?

Is there any legal or policy recourse I might have with my bank?

I suspect that this is yet another money-grab from a mail-in-rebate program. Getting a product and $50 back sounds like a good deal but some number of people won't fill out the form, a few more won't follow through and print the check, some additional folks won't cash the check, and finally there's the deposit barrier from my bank.

Answer 1

The American National Standards Institutes recommends but does not require, banks to use E13B font in magnetic ink. All banks are permitted to refuse checks not printed on the MICR line in magnetic ink. Home printers are not compatible with industry standards. I do find it surprising that they said it wouldn't be accepted for deposit by image, but if the font is wrong, it won't go through the banking system at all. Some banks do allow the processing of checks without a MICR line by manually encoding it in a special carrier with the original numbers on it. Most charge a fee for that special collection process though. The receiving bank may be required to verify that the coding matches in certain types of accounts.

Reg CC does require the existence of a MICR line, but the ANSI standard does specify when magnetic ink is not required and Reg CC permits but does not require, the banks to create a substitute check that meets the necessary requirements.

What options do I have to solve this problem?

You can change banks or go to a check cashing facility.

Is the check issuer on correct legal ground?

In some states, a napkin with all the appropriate legal language is a valid draft. The banks need not accept it, but it is valid. Banking contracts with the customer specify what can be accepted. Being legal and being acceptable are two different things. Another common, but odd, draft that sometimes creates issues is the sight draft. Common in the American southeast, they are a check printed on an envelope where the receiving bank is only to pay if the envelope has been sealed with executed documents inside of it.

For example, if I wanted to pay you to buy your car, I do not want the check to clear unless there is a signed and correct car title inside the envelope. The bank verifies its contents and if they match the outside of the envelope, then payment clears.

I have seen commercial loan applications written on a napkin before.

Is there any legal or policy recourse I might have with my bank?

No. The contracts with the banks in use today are highly restrictive on customer rights. Even if it involved huge sums of money, it is not likely you would prevail. On the other hand, if it involved millions of dollars, I wouldn't be surprised if the bank found some magical method to charge a very sizable fee and make it work.

Answer 2

Your main recourse is against whoever's issuing you the rebate. They have a legal obligation to cause you to have the money in your account; that third parties are failing to cooperate does not relieve them of that obligation. If you paid by a credit card, you have 60 days for a chargeback, so that's some leverage. Otherwise, you'd have to sue, and filing a lawsuit for $50 isn't really cost-effective.