A hold was placed on your check because check specific information indicates item may be returned

I recently deposited a check for $5000 into my local Band of America branch ATM on Saturday, March 30th. The receipt I got back shows that they plan to hold the funds until April 10th, stating that “check specific information indicates item may be returned.” Inconvenient to be sure, but more frustratingly, I’m fairly certain their hold is not legally justifiable. Bank of America would likely disagree with this assertion, so allow me to show my work.

Generally, funds from check deposits are supposed to be available by the business day after the date of the deposit (Regulation CC, Section 229.10). There are however exceptions that may cause a hold to be placed on the check (Regulation CC, Section 229.13), but the reasons for an exception are clearly stipulated, and none of them apply to my situation, account, or the check in question. BOA, in line with the exception rules states in their “Deposit Agreement and Disclosures” document (page 31) that they reserve the right to place a hold on check deposits if:

• We believe a check you deposit will not be paid
• You deposit checks totaling more than $5000 on any one day
• You redeposit a check that has been returned unpaid
• You have overdrawn your account repeatedly in the last six months
• There is an emergency, such as failure of communications or computer equipment

I’m going to disregard that last item because I doubt it pertains to this situation, but let’s look at the other 4 factors that might result in a hold:

• I have cashed checks from this entity in the past, and they have cleared with no problem (yes, always from the same checking account). If the bank suspects that there is reason to believe that a check will not clear, they are required by federal law to specify what those reasons are, which they have not done.
• The check was not for “more than $5000,” but right at that threshold.
• This is not a redeposited check, and I have never deposited a bad check in the 20 years I have been banking with BOA.
• I have not overdrawn my account repeatedly in the last 6 months—not at all, actually.

We’re off to a good start! My account does not exhibit any of the high risk flags illustrated in Bank of America’s own published criteria for determining whether to place an exception hold. For the most part, BOA’s policies are in alignment with regulation CC; the problem is, they are not complying with those policies.

Now, I understand the need for banks to assess and attempt to mitigate financial risks, but the whole reason Regulation CC was established was in order to provide guidelines for the responsible handling of banking customers’ funds—to ensure that, excepting high-risk scenarios, customers are able to access the money they have entrusted to their financial institution. The check deposit hold criteria that BOA subscribes to are legally defensible, but we’ve already established that my account does not meet any of them. In their “Deposit Agreement and Disclosures” document, BOA states that a letter describing their reason for holding funds will be sent within one day of the date the deposit was received. This is in line with Regulation CC, but again: no notice has been sent. In my case, since the deposit was made over the weekend, this means that the notice should have been sent to me on Tuesday 4/02, and should have arrived today (4/03).

With that in mind, I wanted to wait until today to see if they sent the legally mandated notice, and also because I suspected that the check would have cleared the issuer’s account by now. Around 2pm, my mailman came by, and no notice was received. I called the person who wrote the check and sure enough, they show that the check was cashed yesterday (4/02). I wanted to confirm both suspicions before I reached out to BOA to attempt to have this hold released.

Having prepped myself with research on Regulation CC, Check 21 processing (a system which virtually every bank in America utilizes that allows for the digital processing of checks, dramatically speeding up the transfer of funds), and having confirmed that the check cleared the issuing bank already, I went to the BOA branch that I deposited the check at today in order to try to have the hold released. Prepare yourself for that lengthy tale…

Upon entering the bank I was approached by a Relationship Manager by the name of Ly (I’m going to use first names so that BOA can hold its people accountable, but I won’t use last names or disclose the name of the branch in order to preserve some anonymity for these folks who are just trying to do their jobs). After explaining my situation to Ly, she told me that I would need to contact the ATM deposit department, which apparently utilizes a separate processing center from the one used by tellers of the actual branch. She claimed that branch associates were unable to see deposit information for checks processed by the other department, and that they in turn could not see certain information on checks cashed at a local bank branch. It sounded like bs to me (I’ll come back to that), but I wanted to try to be amicable, and follow their protocol to the best of my abilities.

I called the number (1-800-432-1000), and after waiting 5 minutes or so on hold, got a nice-sounding, southern-accented woman on the line who started looking into the issue. I didn’t get her name because frankly, I was pretty certain that I would need to be escalated to a supervisor to resolve this issue, and not surprisingly, when I started talking about Regulation CC stipulations on the availability of funds and the legal requirement of providing a substantive reason for an exception hold, it quickly became clear that she was out of her depth. She could not provide me with any further information as to the reason the check was held, and did not know what to say at my assertion that this hold was non-compliant with BOA’s own policies regarding deposit holds and more importantly, with the federal guidelines of Regulation CC.

I asked to speak with her supervisor, and was soon connected with a man named Xavier. One of the biggest things I wanted to settle was the reason for the hold—if I had any reason to think that it was legitimate, I would never have pursued the issue so fervidly. On the deposit slip I got from the ATM, it said, quite ambiguously that “A hold was placed on your check(s) because check specific information indicates item may be returned.” While nebulous, it seems safe to assume that this check is being treated as an exception to normal availability policies, and given that, the burden of proof for substantiating those reasons rests on Bank of America. I basically said all of that to Xavier, and asked point-blank: what is the reason for this hold? His response was that it was for “verification.”

Again, the guidelines established for delaying the availability of funds are clear (A Guide to Regulation CC Compliance, under sub-section: Delaying of Funds Availability). It can be done for:

• “large deposits,” in which case, only the amount over $5000 would be subject to a longer hold (229.13(b) of Regulation CC guidelines (page 6)). The first $5000 would be subject to a 3-day disbursal of funds: $200 the 1st business day after the deposit, $800 the 2nd day, and the remaining $4000 the 3rd day, with any remainder potentially held until the 7th business day (see Figure 1, below). This still does not apply in my situation as the check was not in excess of $5000, nor did any of the 3 representatives of Bank of America cite this clause as a reason for the hold.
• Redeposited checks, which this was not
• Deposits to accounts that have been repeatedly overdrawn—again, not applicable to my situation
• Reasonable cause to doubt the collectability of a check… well, they never gave me a reason to substantiate this one, much less admit outright that that is their assessment, but all signs point to this being the ostensible reason.

“Verification” is not a clear reason, and while Xavier never went as far as to say that “reasonable cause to doubt the collectability” was their justification for the hold, what alternative explanation can there be?

Under normal conditions Regulation CC guarantees next-day availability of funds from deposited local checks (they’re all local at this point—that’s nomenclature indicating that the check-issuing bank and the depositing bank utilize the same Federal Reserve processing region, and there has been only one in the US for years). The fact that my funds are being held in their entirety means that I have been placed under an exception hold, and in order to do so, BOA is under a strict legal obligation to provide reasonable cause for placing such a hold.

I hate to beat a dead horse here, but Regulation CC is very transparent about the bank’s responsibility for justifying an exception hold, requiring a clear reason be given to the customer for that decision. Here is an excerpt from the long-form document on the Expedited Funds Availability Act, Section 229.13(e) (EFAA and Reg CC are the same thing)—underlined sections are my own for emphasis:

If the depositary bank intends to use this exception, it must notify the customer, in writing, at the time of deposit. If the deposit is not made in person or the decision to place the hold is based on facts that become known to the bank at a later date, the bank must mail the notice by the business day after the day the deposit is made or the facts become known. The notice must indicate that availability is being delayed and must include the reason the bank believes the funds are uncollectable. If a hold is placed on the basis of confidential information, as when check kiting is suspected, the bank need only disclose to the customer that the hold is based on confidential information indicating that the check may not be paid. If the depositary bank asserts that the hold was based on confidential information, it must note the reason on the notice it retains as a record of compliance. The bank must maintain a record of each exception notice, including documents and a brief description of the facts supporting the reasonable-cause exception, for two years.

Having failed numerous times to provide a clear reason for the hold, and not citing any “confidential information” as outlined above, the issue of Regulation CC violation goes unresolved. Since it was clear that this line of questioning was leading nowhere (aside from cementing that they do not in fact have a justifiable reason for the hold), I decided to switch gears.

I let Xavier know that I had spoken with the check issuer today and confirmed that the check cleared on Tuesday 4/02. I asked him to check with his risk assessment team to see if they could confirm the availability of funds given this information, and he agreed to try. He put me on hold for a few minutes, and when he came back, he told me, faux-apologetically that they were unable to get in touch with the back-end processing team at Cascade Central Credit Union to confirm this. He went on to say that it was difficult for one bank to get ahold of another’s back-end processing team, and suggested that I ask the person who wrote the check to contact them.

What??? After already confirming that the check cleared the issuing bank, he wanted me to further inconvenience the person who wrote the check in order to make him jump through hoops to get confirmation that the funds were indeed available? The funds that I already told him were not only available, but had been withdrawn from the issuing account a day prior? Assuming I would have gone through this preposterous step as suggested, what good would that have done after already confirming that the funds were good, and were indeed in the process of being transferred to BOA? Would they suddenly take my word for it, when my previous verification of the check having cleared was insufficient cause for them to release the hold? I find that doubtful. I suspect Xavier was just trying to get me off the line at this point, but I was not taking the bait.

I posed Xavier an honest question: “if I, as a mere consumer, was able to get ahold of you, who were in turn able to contact your risk-assessment team without any semblance of difficulty, why can’t BOA risk-assessment team contact Cascade Central Credit Union in order to settle this issue?” That would be the most expedient solution. It’s ridiculous to want to drag a third party into my dispute when a quick confabulation between the two banking entities could resolve the issue in a heartbeat. But Xavier was undeterred, and insisted that he/they were unable to do so.

Since I have deposited checks from this account in the past without any extraneous holds, I asked Xavier why this one was suddenly flagged, and whether, on the basis of the historical good-standing of the account, the risk team could release at least a portion of the funds. He agreed to ask, and again put me on hold for a few minutes before coming back to tell me that they were unable to see any previous checks from this issuer in my account history. It hadn’t occurred to me until now, but previously, I had deposited those checks with a teller. It would seem that what Ly told me when I first walked into the branch was correct: the ATM deposits and the in-branch deposits were processed in entirely different systems, and the teams dealing with one could not access information from the other. This didn’t help me, but I do find it rather interesting. If that’s the case, there is a strong case to be made for never again making another check deposit via ATM—at least with Bank of America. Also, I can’t help but balk at the wildly inefficient nature of this operational structure. They seemingly work in a system where departmental fragmentation results in no one group being able to get a comprehensive view of a customer’s account activity—on the one hand, it does a great job of allowing them to claim ignorance, but that seems like more of a liability than a boon.

At this point, I was frustrated, and told Xavier that I believe that their treatment of my situation is a violation of Regulation CC, probably a UDAAP violation, and while I acknowledged that I was likely at the end of my tether with him, this was not the end of this issue as far as I was concerned. I also apologized to him for raking him over the coals with all the legal mumbo-jumbo, but asserted that I think he knows in his heart of hearts that BOA’s handling of this situation was in clear violation of federal regulations, and that it was, in my own eloquent words: “fucked.” I swear, I heard something akin to a laugh out of him at that comment, which is fine—he’s a person, and I’m not trying to pick on people. But I am trying to hold big banking accountable for their policies and for complying with the governing entities in place to ensure consumer protections.

Having finished with Xavier after 39 minutes, I stood in the teller line, ready to speak with one of the local BOA branch managers, and a gal named Tracy at the teller window asked if there was something she could help me with.

First of all, Tracy was not just a teller; I had seen her at one of the account manager desks, chatting with a couple while I was on my call with Xavier, so I knew that she had at least some executive authority. More than likely she overheard my conversation with Xavier, and was already prepared to shut me down, because when I started to explain the issue to her, she immediately cited BOA’s authority to reserve the right to place a hold on any deposited check. While this is true, I couldn’t help but point out that they can only do so, provided they have a legitimate reason, and that they convey that reason to their customer (again, this is federal regulation). In response to my rebuttal, she declared that the reason for the hold should have been indicated on the ATM deposit receipt, but as I’ve already noted “check specific information indicates item may be returned” is hardly a substantive reason for placing an exemption hold on account, especially when Regulation CC stipulates very clearly that the notice “must include the reason the bank believes the funds are uncollectable.” That reason must be provided to an affected customer in any situation in which an exception hold is invoked. Tracy then asked to see my ATM receipt, which I provided, and went on to tell me that the vague check-deposit-hold-blurb on the ATM receipt was all the legal compliance required of Bank of America. Neither Tracy nor Xavier seemed to grasp that they answered the what, but not the why—the latter question being by far the more important one, and one which Regulation CC is pretty clear about requiring explanation for on the part of the financial institution.

I aptly pointed out BOA’s own “Deposit Agreement and Disclosures” document, and the qualifying factors for an exemption hold—none of which apply to my account or my situation, and she tried to assert that maybe the check issuer had a history of writing bad checks, and that that is the reason for the hold. I’m not going to lie, this infuriated me. The person who wrote this check is a retired mechanical engineer, an Air Force Reserve Pensioner, the son of a retired Police Officer, and one of the most stand-up guys I have ever had the pleasure of knowing. I looked Tracy square in the eye, and after a meaningful pause, simply said, “I doubt that’s that case.”

Obviously feeling as though she had successfully quashed my objections, she told me that she was not there to go around and around with me on the issue, and on that point, I more or less agreed with her. There’s no point trying to reason with someone who just regurgitates the same non-answers over and over without ever really addressing the question at hand.

I was hoping for a better resolution, but in a sense, I got what I came for. No reason was ever given to me for the egregious hold (and to be fair, had they given me any sort of legitimate reason, I would have let it go at that). No accommodation was offered to a customer who has banked with them for 20 years, and has never cashed a bad check, and rarely overdrawn my account (to be fair: I was irresponsible in my 20’s like many of us, so it happened once or twice a decade ago, or more). No attempt was made on the part of BOA to verify my averring that the check had cleared on the payee’s end, and could be released to me without further risk.

Some of that is simply a failure of customer service, and let’s be honest: we expect that of big banking these days, sad though that may be. But failing—repeatedly; at least 8 times, aggregated between the handful of reps I spoke with—to provide me with a reason for this hold… that’s a clear violation of Regulation CC, no two ways about it.

This has actually happened to me once before. Last year, BOA held one of my paychecks from a restaurant I had been working at for a few months. I’d had numerous other checks from that payer previously deposited into my checking account, and when I inquired about the hold, they were unable or unwilling to give me a more specific reason why they suspected that this particular one would not clear. At the time, I didn’t pursue it, and simply waited it out, but since this new instance of lengthy hold-time is starting to look like a pattern, I started researching banking regulations and the picture of BOA’s non-compliance began to emerge.

I am in the process of filing a complaint with the Federal Reserve, and I urge anyone else who has encountered similar issues to do the same (do your research first, obviously): //forms.federalreserveconsumerhelp.gov/secure/complaint/complaintType

If anyone out there has had similar issues with Bank of America, I welcome you to comment on this article (or send me an email if you don’t want it to be public). If I can hear from enough people to start a class action lawsuit, I will be happy to do so. Not only is this a violation of Regulation CC, but from similar stories I have found in the process of my legal research, Bank of America has exhibited a pattern of targeting low-income customers, and I think this might constitute a UDAAP violation as well. While I try to avoid conspiratorial-think, it is starting to look quite believable that there is a discriminatory practice at play on the part of Bank of America to prey on low-income customers who might be overdrawn as a result of arbitrary check holds—customers who, stymied by their own limited resources, have little choice but to concede to the whims of the big bank who controls their financial assets. I for one have had enough of being bullied by them.

Let’s start holding them accountable.