What is a bank’s responsibility if it clears a bad check?

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What is a bank’s responsibility if it clears a bad check?

I recently deposited a check that was cleared the next day, however 2 days later the bank had the check on debit hold after I withdrew the funds which caused my account to overdraft. The check is said to have been bad. The money that I withdrew was sent through Western Union for an on-line job. Why did the bank clear the check and give me the funds if the check is not cleared? What are my rights since I don’t have the funds anymore?

Asked on March 3, 2011 under Bankruptcy Law, New Jersey

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Western Union and online jobs are actually the formula many agencies are warning against. Quick word to the wise, if you have to pay to get a job or pay someone any overages on checks sent to you for something you sell online and have to refund it in person, chances are it is a scam. The person submitting the check into his or bank account (i.e., the payee) is responsible to ensure that the check is good when depositing into his or her account. Therefore, you are ultimately responsible under state, federal laws and case law to ensure what you deposit is good monies.  The Expedited Funds Availability Act is a federal law that requires banks to make the first $100.00 immediately available to you and the remaining amounts available to you within a specific period of time as outlined by formula in the law. The bank cannot hold the monies too long before making it available to you. Unfortunately, checks go through specific systems between banks to be cashed. When the bank figured out (when the other bank refused to honor the check) that the check you deposited was bad, it had no choice but to deduct from your account, thus resulting in the fees you incurred. You could talk to your bank and see if it would on your behalf credit some fees back but as to the monies you withdrew, you must pay the bank back those monies.


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