Why may bank refuse cashing a check?

Many people complain about banks, stating that banks either refuse to cash the checks they issue or they charge overly high fees to cash them. A number of customers send letters to popular media editions to learn why banks don't always cash checks. A very interesting information was presented by the MarketWatch.

A number of people said that when they try to cash checks at the banks that issued them, the banks either refuse to cash the checks or they charge steep fees to cash them. Reason given: Those seeking to cash the checks are non-customers.

"Can banks do this? Doesn't this violate the bank's duty to honor a negotiable check?" several readers asked.

"The courts have held that consumers have no right to be able to cash a check if they are not a customer," said Mark E. Budnitz, law professor at Georgia State University in Atlanta. "I don't know of any decisions where the customer won." 

This seems to unfairly penalize people who don't have bank accounts. However, it's also true that check-cashing fraud is widespread. That can mean a loss to the bank if it cashes your check and you're not who you say you are. 

One legal expert said the bank may be liable for not cashing the check if you can get the bank to "certify" the check as its own, substituting the bank's promise to pay for the customer's. Plus, in certain circumstances the bank could be liable to its customer -- the person who wrote the check -- for not honoring it. 

Is a bank not honoring your employer's check? In that case, you still have a right to get paid for your work. However, your case would be against the employer, not the bank.

Source: MarketWatch