admin wrote:
I first heard of the midnight law when reading the story at the link below
http://www.goodthink.com/writing/view_s ... &page_id=2quote from story:
Quote:
Again the teller keyed in my account number. Then she said, "$95,093.35 deposited on May 21st. You're safe to spend that money now because that check can no longer be returned. Depositors are protected by a law that says checks cannot be returned after 10 business days."
I swear that years ago someone also told me that the bank had 24 hours to tell the customer when a check comes back as counterfeit. . . .
The check will not even reach the paying bank in 24 hours..............
The paying bank has till midnight on the day they receive the check to send it back through the system, if they pay the check, the person that the check is drawn upon will not be at a loss the bank will be. It protects the person that the counterfiet is drawn upon.
If I deposit a check in South Texas, it takes a day for it to be processed at the bank, it is then sent out to the Fed in Dallas, that takes a day. The check is drawn on a credit union in Washington State, it takes the check at least 2 days to get there. They then, after four days, have the right to refuse the check by midnight,. They reject the check send it back to the Fed, two more days, then one day back to my bank. That check was returned by midnight on the day it was received, at the paying bank. I did not receive the check back for 7 business days..............
Does that example clarify the system?
Basically the midnight rules states that the paying bank must return the check in the system on the day it receives it, if they do not return it on that day, the bank is responsible for paying the counterfeit. But the whole process can take up to 10 days or maybe more.