Q626: What do I do about a bounced cheque?
A cheque can be 'bounced' for a number of reasons which include,
- insufficient funds in the account its being drawn on,
- it has been cancelled by the drawer (the person who wrote the cheque) or
- a technical reason (unsigned, wrong date, amount etc)
- fraud (maybe it is a stolen cheque).
Usually if a cheque is 'bounced' the banking institution will write further instructions on the cheque such as 'Refer to Drawer Re-present' or 'Refer to drawer'.
If it states 'Refer to Drawer Re-present' then you can re-present the cheque again up to a maximum of 3 times although the bank does usually re-present the cheque before sending it back to you. Your bank may charge a fee for this.
If it states 'Refer to Drawer' then the cheque is effectively cancelled and cannot be re-presented. You need to get another cheque from the person or get them to give you cash.
If someone you do not know sends you a cheque then you should wait until it has cleared before drawing out the money or releasing any goods.
Be very clear when speaking to your bank about what you mean. The bank may allow you to draw funds on the cheque before it has cleared so should the cheque subsequently bounce you will be out of pocket.
When you speak to the bank about a cheque clearing, make sure they are aware that you mean that there is no danger of the cheque being returned unpaid and it has been honoured. The only way to really ensure that a cheque has been paid is to ask your bank to 'specially present' the cheque, there will be a charge for this and it may vary from bank to bank. If the cheque is a small amount then it may not be worthwhile but if it is a substantial amount and you are releasing goods then it could be beneficial.
If you suspect that a fraud has taken place then you should notify your bank who will advice you to report the matter to your local police station.