Why are there laws to place such long holds on checks(10days)? Can’t the receiving bank simply call the bank where the check originates from and velidate it themselves?
In: 5
There are a lot of reasons for a hold.
1) you simply do not have matching funds in the account
2) you have a history of fraudulent transactions
3) you’re opening a new account with a check
4) as multiple people have said, there are so many checks coming through daily that it’s impossible to verify them all.
5) a lot of banks have started to not verify funds are available for checks since they are unable to verify that is the only check that has been written off that account. Example – I write you a check for $20 and your bank calls to verify I have the funds available at my bank. At the time of calling they don’t know that I wrote a check for $500 to pay for something else. The $500 check clears first and leaves me with $15 in my account, so now your check won’t actually clear.
To answer one of the other comments I saw, a system that is automated would also not be able to know what other checks have been written off of that account and you would run into that same situation I just mentioned except the bank would have paid a lot more for that software than if they would just place a hold on the check.
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