STOP PAYMENT ORDERS ON CHECKS DON'T ALWAYS WORK
A Watauga, Texas couple wrote a check and stopped payment on it at their bank the next day. Six months and six days later their bank, Washington Mutual, cashed the check for a customer who presented the check for payment. The couple was out $1,350.00 and the bank refuses to help. I did some research after I read this story. It turns out that the current standard banking practice allows banks to place a date limit on stop payment requests. There is no hard specific rule on how long a stop payment order is in place. Banks are free to make up their own policies in this matter.
Most banks now have a 6 month limit on stop payment orders. In order to continue a stop payment order, you must renew your stop payment request every six months, paying a substantial fee each time you renew. This seems completely outrageous, but it has apparently become a standard banking practice.
Further, if a check comes in to your bank that is dated more than six months old, at their discretion, your bank can decide whether it wants to pay the check or bounce it based on the old date. This also seems ridiculous but appears to be standard banking practice.
I checked these rules with my bank. They told me their policy was essentially the same as what I outlined above. After six months, a stop payment order expires. If a check comes in older than six months, they usually don't bother to check the date and process it anyway. Most checks are processed in bulk, and therefore they do not see the dates on the checks unless presented in person. If there are insufficient funds, the account owner gets nailed with overdraft fees. The only way to avoid this is to pay a $30 (approx.) stop payment order every six months until the check arrives. If it never arrives, you can continue to pay those fees forever.
Apparently the only safe way out is to close your account and open a new one. The fine print of the checking account agreement in that multi-page contract you signed when you opened your account will address the bank policy, or possibly, in the stop payment request form that you filled out.
Even if you have a statement like "Void after 120 days" printed on your check you can still be stung by your bank. Again, the fine print of the checking account agreement in that multi-page contract you signed when you opened your account will address the bank policy. Policies like these are in place to make it easier for the bank in their processing of checks, and are not intended to afford you, the customer, with any effective permanent protective measures.
This can be extremely frustrating and expensive should you get caught in this type of situation. However, the standard practices within the banking industry appear to rule.
Bottom line: A lot of people out there think that a stale-dated item cannot legally be paid. That is an urban myth and is simply not true. So, be very careful. It is always safer to not issue the check than to issue a stop pay order to your bank.
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