The Grounds for Stopping Payment on a Money Order
If a money order has been lost, stolen or destroyed, the bank that issued it can usually place a stop payment. If the bank is unable or unwilling to place a stop payment and you live in a state that supports the Uniform Commercial Code (UCC), you can submit an enforceable claim. As the person sending the money order, you are considered the remitter and can submit the claim as long as the funds have not been presented for payment by the payee. Once the payee cashes the money order, you cannot stop payment.
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Bank-Issued Money Order
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When you pay for a bank-issued money order, it is signed by a bank official. Generally, the bank official fills in your contact information, the monetary amount and the payee's information. Most banks consider a money order to be similar to a cashier's check. If the money order is lost, stolen or destroyed, you can request a stop payment on the order. Since a bank-issued money order is treated like a cashier's check, you can call the bank and request a stop payment or ask the bank to refuse payment if someone tries to cash it.
Personal Money Order
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If you purchase a personal money order, the remitter and payee information is generally not filled in by a bank official unless she does it as a customer service. A bank official does not sign the money order because you are required to sign it. As long as the bank issues the money order and either you or the bank completed the remitter and payee fields, you can usually request a stop payment for loss, theft or destruction. However, this can be problematic for both you and the bank if the check is lost or stolen without a remitter or payee listed on the order.
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Uniform Commercial Code Section 3-312
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If the bank or financial institution that sold you the money order cannot or will not place a stop payment on the order, you can submit an enforceable claim. According to the Uniform Commercial Code Section 3-312, if you report your money order as lost, stolen or destroyed, you can submit a legal claim. The statute requires that you submit a declaration of loss along with the claim. The claim is effective the later of 90 days after the money order is issued or the date the claim is made. You must submit the claim to your local state agency responsible for handling UCC claims. Usually, the bank or financial institution places a stop payment on the check once it is notified of the claim.
Fraud
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If you suspect someone fraudulently cashed your money order, contact the payee to verify that he did not cash the money order. Fraud is a federal offense punishable by law, so make sure that the money order was cashed illegally. Verify the date the money order was cashed and request any information about the payee from the bank or institution that sold the money order to you. You will likely need to hire a lawyer to help you rectify the fraudulent claim.
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References
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