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Aug 22, 2008
Categories: Accounts

Seinfeld & Stale-dated Checks; Learning Curve

Yesterday, the Wall Street Journal reported that Microsoft has hired Jerry Seinfeld to appear in a new line of ads.  I'm a huge Seinfeld fan.  To this day, my brothers and I trade Seinfeld references like they were baseball cards (think the 80s and 90s when baseball card collecting was popular).  Hopefully this background helps you understand why my mind wondered to a Seinfeld episode during a recent presentation I was attending on check returns.  The result?  This Question & Answer which will appear in next month's NAFCU Regulatory Compliance Newsletter:

"Question:  I was recently watching a re-run of Seinfeld, it was the episode where Kramer convinces Jerry to cash the old birthday checks that his Nana had been sending him throughout the years.  Am I correct in my understanding that the bank or credit union would have the option of whether to pay those checks because they would be stale-dated?

Answer:  Yes, you are correct.  Section § 4-404 of the Uniform Commercial Code states that “[a] bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer's account for a payment made thereafter in good faith.”  Thus, the financial institution can cash a stale-dated check but is not required to, meaning that the financial institution can refuse to cash the check without being accused of “wrongful dishonor.”  The rule makes sense too because financial institutions cash these checks all the time.  In early January (and maybe even February), for example, many of us write checks that reflect the past year (i.e. 2007 instead of 2008).  It is a simple, honest mistake but the check is technically stale-dated.  Recognizing the various situations where a stale-dated check could arise, the UCC provides flexibility to financial institutions to determine when to pay a stale-dated check.      
    Back to Seinfeld.  The bank did cash those stale birthday checks which resulted in Jerry’s Nana wandering around the streets of New York looking for her closed-down bank.  The bank could have refused to pay these checks – but, of course, that would not have made for as entertaining of an episode.  Click here for more information on this episode of Seinfeld."

I know, I know.  My posts are getting stale (pun intended).  Two posts in one week on stale-dated checks?  What is this, amateur hour?  (To understand why the last two question are funny [to me], see this episode of Seinfeld or read the episode script here.)

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It has been one week of blogging for me - I'm amazed how Anthony the Compliance Guy finds time to do this everyday.  It is not easy...especially in the middle of August when the news seems a bit scarce.

You may have noticed a variation in the timing of the blog e-mail notifications.  Diagnosing the problem has been as fun as stubbing your toe, but hopefully it has been corrected so you can continue to get your blog fix each morning.  Apparently, Feedburner - which supplies the daily e-mail feed - does not like it when you copy and paste text from a word document into TypePad.  Details here for those of you who are interested.  I am sure glad Anthony mentioned that tidbit before he headed out West on his honeymoon for two weeks....   

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I'm off to Michigan's West Coast (which is the eastern shore of Lake Michigan) for a friend's wedding and my nephew's baptism.  In addition, I plan on spending some time at Van Buren State Park , visiting "Big Red" and my alma mater in Holland, and enjoying some tasty brews from my brother's favorite local brewery.   

Have a great weekend everyone.

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