Notice of Nonpayment of Checks in the Amount of $2,500 or More

When you decide to return a check in the amount of $2,500 or more, you must notify the depositary bank of that fact within a time period which in many cases will be shorter than the time it would take the check to be returned to the depositary bank. In particular, the notice must be received by the depositary bank by 4 P.M. (local time of the depositary bank) on the second business day following the banking day on which the check was presented to you. If the second business day is not a banking day for the depositary bank, you can make the notice on the next day that is a banking day for the depositary bank. The notice can be in writing or it may be made by telephone or telegraph. [12 CFR 229.33(a)] The notice must contain the following elements:
  1. The name and routing number of the paying bank;
  2. The name of the payee(s);
  3. The amount of the check;
  4. The date of the indorsement of the depositary bank;
  5. The account number of the customer(s) of the depositary bank;
  6. The branch name or number of the depositary bank from its indorsement;
  7. The trace number associated with the indorsement of the depositary bank; and 8. The reason for nonpayment.

[12 CFR 229.33(b)]

If you give the notice in writing, it must also contain the name and routing number of the depositary bank. [12 CFR 229.33(b)]

If you are not sure of the information required by any of these items, you must include as much information as you can and mark with question marks any information of which you are not sure. [12 CFR 229.33(b)]

The check itself contains all the required elements of the notice except for the reason for nonpayment, so if you add that and you can return the check within the required time frame, it can function as the notice. [12 CFR 229.33(a)]

As we pointed out in the discussion on the depositary bank’s responsibilities, there are certain locations and certain telephone and telegraph numbers at which depositary banks must accept these notices. Telephone and telegraph notices can be made at the telephone or telegraph number that the depositary bank included in the indorsement on the check or if no number is in the indorsement, then at the general-purpose number of the head office or branch indicated in the indorsement. If the depositary bank generally holds out or makes known some other number for receipt of these notices, you can also make the notice to that number. [12 CFR 229.33(c)]

The depositary bank must accept written notices of nonpayment:
  1. At any location where the depositary bank requests the presentment of forward-collection checks; and
  2. At a location consistent with the name and location in the indorsement on the check; or if there is no address in the indorsement, at the location associated with the routing number in the indorsement; or if the address in the indorsement and the address associated with the routing number in the indorsement are not in the same check-processing region, at a location consistent with either address; or if there is neither an address nor a routing number in the indorsement, at any branch or head office of the depositary bank.

[12 CFR 229.33(c)(2) and 229.32(a)]

As with the expeditious-return requirements, this notice of nonpayment requirement does not apply if the check was deposited at a depositary bank which does not offer transaction accounts. [12 CFR 229.33(e)]

The rationale for the notice of nonpayment rule is that large-dollar checks present a greater risk of loss to the depositary bank and the depositary bank’s customer because of the larger amounts. Because of the greater risk, even prompter notice of nonpayment than would be provided by the expeditious check-return requirements is justified.

The notice-of-nonpayment requirements do not, however, apply to a check drawn upon the United States Treasury, to a U.S. Postal Service money order, or to a check drawn on a state or a unit of general local government that is not payable through or at a bank.

Wolters Kluwer sells Form Reg-J-NRI, Notice of Returned Item, which can be used to record notices you send to depositary banks of items you are returning. It also can be used to record notices you receive from paying banks of items being returned.

Locations at which checks may be presented to you for