Laws Regarding Check Cashing

Since the Check 21 Act was signed into law in 2003, check cashing has become a much quicker and more streamlined process. Some people still choose to cash their checks at check cashing locations because they feel that it is a more convenient way to get direct access to cash on payday. To prevent check cashing customers, businesses and banks from being ripped off, there are certain laws and regulations that must be followed.

Check 21 Act

Under the Check 21 Act, banks can process the checks they receive from customers electronically by sending a digital image to the other bank for immediate approval.

Bounced Checks

When a cashed checked bounces, the account holder is ultimately held responsible for the amount due. But the check cashing location or bank will most likely go after the person who cashed the check to cover the amount due. Then, the person who cashed the check will have to go after the person or company who wrote the check.

Check Clearing Policies

Banks are required by law to disclose the order in which checks that you write will be cleared. Some banks cash the largest checks before the smallest, which could result in excessive overdraft fees.

Bad Checks

You can be arrested for writing bad checks that you have no intention of covering.

Credit Card Information

A merchant, bank, or check cashing business cannot require that you write your credit or debit card number on a check in order to cash it.

Resources

• Check Clearning Policies
• More About Check 21