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Lack of Verification of Funds for Check Leads to Collection Notice

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I paid a contractor with a bill pay check after they told me the work was completed (I was out of town).  When I got back the next day I noticed that work was not completed so I put a stop payment on the check.  Unfortunately, the bank said the check was already generated and mailed out.  Contractor went silent and I texted him to not bother cashing the check since I already put a stop payment on it.   Never heard from him again.  Today I get a notice from a Debt Collector stating that I owe the full check amount.  Apparently the contractor was able to cash the check at Walmart and since it got returned, now Walmart is coming after me!  

I'm pretty shocked that this situation could happen.  Don't check cashing places verify the funds of a check before paying the money out?  I already called the debt collection agency to explain the situation and they notated the account.  Not sure what happens from here.  They told me to call again in 1 week.

How can I get Walmart to go after the contractor for cashing a check they knew was not valid?  What else can I do at this point.  The debt collection letter had threatening language it in so I'm a bit worried about my credit taking a hit if this situation doesn't get handled properly.

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Most sane businesses accepting checks do use (or should be using) one of the methods described in https://en.wikipedia.o... (more)

aurelius32 (Jun. 17, 2017 @ 3:58p) |

Not a one of those check verification services mentioned in your link, aside from "Merchant Funds Verification" which ha... (more)

Glitch99 (Jun. 17, 2017 @ 5:56p) |

I use Chase and this is also my experience. one of my tenants who uses automated bill pay from his bank, however, doesn'... (more)

rufflesinc (Jun. 17, 2017 @ 6:08p) |

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rated:
Ultimately it was your mistake to generate the check without checking the work. Stop payment is for a lost or stolen check where the payee is aware of the circumstances and agrees to get another check with a new issue date. Maybe the contractor really finished the work and you're trying to stiff him? Why should the debt collector believe your story? You owe the money to the collection agency. You can try to sue the contractor, which is where the dispute really belongs. Expensive lesson learned.

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Seems like the contractor knew what he was doing. If he had deposited the check in his own account, I doubt this situation would have happened.

Of course this if ultimately my own fault for triggering the bill payment early. I just didn't think such a situation could have occurred. Not sure many people are aware about how these check cashing places work.

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> How can I get Walmart to go after the contractor for cashing a check they knew was not valid?

The check was always valid. You were just trying to hoodwink the contractor into thinking that the check was not valid but I didn't see any evidence of check becoming invalid.
 

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araknis said:   What else can I do at this point.

It's called "holder in due course."

The contractor knew exactly what he was doing.

The lesson is that stop payments do not solve your problem. They can create more. If you are sued by the check casher, you will lose, and you'll be out the cost of the stop payment. Always think in terms of recourse. If you write a check, and the deal is not to your liking, how can you get your money back?

Even the example of the "lost or stolen check." I'd never just write out another one because I know that if the person is lying, they can get paid twice.

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You wrote a check that was no good. Wal Mart ended up with it. You owe them the money. If you believe the contractor screwed you, go after them. You cannot seriously blame Wal Mart.

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Hopefully this thread will serve as a lesson for people on both sides of the situation. People should not worry about receiving a "bad" or "questionable" check since they can always be cashed through a 3rd party check cashing facility. Also, a stop payment should not be used as a way to fix a situation where goods/service were not received.

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Well you didn't follow Rule #1 with contractors, never pay until you know the job is done. So it's not a lesson to people on both sides, it's a lesson to you.

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araknis said:    People should not worry about receiving a "bad" or "questionable" check since they can always be cashed through a 3rd party check cashing facility. 
  What check cashing place cashes personal checks from any John Doe? I'm guessing the contractor was in cahoots with the Walmart cashier. 

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atikovi said:   
araknis said:    People should not worry about receiving a "bad" or "questionable" check since they can always be cashed through a 3rd party check cashing facility. 
  What check cashing place cashes personal checks from any John Doe? I'm guessing the contractor was in cahoots with the Walmart cashier. 

  It was not a personal check.
araknis said:   I paid a contractor with a bill pay check after they told me the work was completed (I was out of town).  When I got back the next day I noticed that work was not completed so I put a stop payment on the check.  Unfortunately, the bank said the check was already generated and mailed out. 
 

  

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search here  thread on this a couple years ago... same answers given.

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fwuser12 said:   
atikovi said:   
araknis said:    People should not worry about receiving a "bad" or "questionable" check since they can always be cashed through a 3rd party check cashing facility. 
  What check cashing place cashes personal checks from any John Doe? I'm guessing the contractor was in cahoots with the Walmart cashier. 

  It was not a personal check.
araknis said:   I paid a contractor with a bill pay check after they told me the work was completed (I was out of town).  When I got back the next day I noticed that work was not completed so I put a stop payment on the check.  Unfortunately, the bank said the check was already generated and mailed out. 
  

  It was from a "person" aka a personal check regardless of whether it was handed over in person or delivered by mail from his bank. I never used a check cashing place but don't they only cash payroll or government checks? Isn't the risk of loss great with any other checks presented for payment?

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araknis said:   I paid a contractor with a bill pay check after they told me the work was completed (I was out of town).  When I got back the next day I noticed that work was not completed so...
Can you elaborate on the nature of what was incomplete?

rated:
atikovi said:   
fwuser12 said:   
atikovi said:   
araknis said:    People should not worry about receiving a "bad" or "questionable" check since they can always be cashed through a 3rd party check cashing facility. 
  What check cashing place cashes personal checks from any John Doe? I'm guessing the contractor was in cahoots with the Walmart cashier. 

  It was not a personal check.
araknis said:   I paid a contractor with a bill pay check after they told me the work was completed (I was out of town).  When I got back the next day I noticed that work was not completed so I put a stop payment on the check.  Unfortunately, the bank said the check was already generated and mailed out. 
  

  It was from a "person" aka a personal check regardless of whether it was handed over in person or delivered by mail from his bank. I never used a check cashing place but don't they only cash payroll or government checks? Isn't the risk of loss great with any other checks presented for payment?

 Walmart's only exclusion is hand written checks.  Otherwise, if it passes their automated risk analysis, it cashes. 

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Glitch99 said:   
 Walmart's only exclusion is hand written checks.  Otherwise, if it passes their automated risk analysis, it cashes. 

  Well apparently their automated risk analysis is flawed if it can't detect even a simple stop payment. BTW the OP stopped payment to the contractor but Walmart ignored that and should have checked for it before handing over the cash. They have no right to go after the OP and should collect from the contractor to whom they gave the cash. That the contractor even brought the check to Walmart should have raised all kinds of red flags. Most contractors deposit checks into their own bank accounts.

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atikovi said:   
Glitch99 said:   
 Walmart's only exclusion is hand written checks.  Otherwise, if it passes their automated risk analysis, it cashes. 

  Well apparently their automated risk analysis is flawed if it can't detect even a simple stop payment. BTW the OP stopped payment to the contractor but Walmart ignored that and should have checked for it before handing over the cash. They have no right to go after the OP and should collect from the contractor to whom they gave the cash. That the contractor even brought the check to Walmart should have raised all kinds of red flags. Most contractors deposit checks into their own bank accounts.

  And what exactly should Walmart have checked first?  The national check stop payment registry, that doesn't exist?  There's no way to even validate the account number on the check is valid.  Their risk analysis can only look back, and weed out banks/account numbers and people cashing checks that have had issues with bad checks in the past.  There's a reason that check writing is subject to specific laws, to ensure any funny business is illegal.

This is no ones fault by OP's for thinking he was being cleaver using a tool for lost and stolen checks when he had simply changed his mind about paying the guy.  Checks aren't credit cards, you don't have chargeback rights.  

OP's only legit defense would be that his bank account was hacked and he didn't send any check in the first place.  Obviously, that is not the case here.
 

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Glitch99 said:   
  And what exactly should Walmart have checked first?  The national check stop payment registry, that doesn't exist?  

  You sure about that? I remember maybe 20 or 30 years ago seeing signs at stores saying, "Your check welcome here" followed by the name of a company that verifies and insures that the funds are good. And that was pre-internet. Pretty sure these days you would just have to scan it and get back a ya or nay in seconds. When the bank issues a stop payment on the check, it should be by routing, account and check number. Very easy to enter into a registry automatically.

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atikovi said:   
Glitch99 said:   
  And what exactly should Walmart have checked first?  The national check stop payment registry, that doesn't exist?  

  You sure about that? I remember maybe 20 or 30 years ago seeing signs at stores saying, "Your check welcome here" followed by the name of a company that verifies and insures that the funds are good. And that was pre-internet. Pretty sure these days you would just have to scan it and get back a ya or nay in seconds. When the bank issues a stop payment on the check, it should be by routing, account and check number. Very easy to enter into a registry automatically.

  You may think you are pretty sure, but you are wrong.

rated:
atikovi said:   
fwuser12 said:   
atikovi said:   
araknis said:    People should not worry about receiving a "bad" or "questionable" check since they can always be cashed through a 3rd party check cashing facility. 
  What check cashing place cashes personal checks from any John Doe? I'm guessing the contractor was in cahoots with the Walmart cashier. 

  It was not a personal check.
araknis said:   I paid a contractor with a bill pay check after they told me the work was completed (I was out of town).  When I got back the next day I noticed that work was not completed so I put a stop payment on the check.  Unfortunately, the bank said the check was already generated and mailed out. 
  

  It was from a "person" aka a personal check regardless of whether it was handed over in person or delivered by mail from his bank. I never used a check cashing place but don't they only cash payroll or government checks? Isn't the risk of loss great with any other checks presented for payment?

  The "person" generating the check was a bank.

rated:
Pay your bills, deadbeat, and then google "holder in due course."

rated:
atikovi said:   
Glitch99 said:   
 Walmart's only exclusion is hand written checks.  Otherwise, if it passes their automated risk analysis, it cashes. 

  Well apparently their automated risk analysis is flawed if it can't detect even a simple stop payment. BTW the OP stopped payment to the contractor but Walmart ignored that and should have checked for it before handing over the cash. They have no right to go after the OP and should collect from the contractor to whom they gave the cash. That the contractor even brought the check to Walmart should have raised all kinds of red flags. Most contractors deposit checks into their own bank accounts.

  If you read, OP did not actually stop payment on the check he just told the contractor this story. You might be surprised at who cashes checks at Wal Mart for many different reasons, including letting Wal Mart pursue bad checks for them.

rated:
fwuser12 said:   
atikovi said:   
araknis said:    People should not worry about receiving a "bad" or "questionable" check since they can always be cashed through a 3rd party check cashing facility. 
  What check cashing place cashes personal checks from any John Doe? I'm guessing the contractor was in cahoots with the Walmart cashier. 

  It was not a personal check.
araknis said:   I paid a contractor with a bill pay check after they told me the work was completed (I was out of town).  When I got back the next day I noticed that work was not completed so I put a stop payment on the check.  Unfortunately, the bank said the check was already generated and mailed out. 
  

  Bill pay checks are personal checks.

rated:
stanolshefski said:   
fwuser12 said:   
atikovi said:   
araknis said:    People should not worry about receiving a "bad" or "questionable" check since they can always be cashed through a 3rd party check cashing facility. 
  What check cashing place cashes personal checks from any John Doe? I'm guessing the contractor was in cahoots with the Walmart cashier. 

  It was not a personal check.
araknis said:   I paid a contractor with a bill pay check after they told me the work was completed (I was out of town).  When I got back the next day I noticed that work was not completed so I put a stop payment on the check.  Unfortunately, the bank said the check was already generated and mailed out. 
  

  Bill pay checks are personal checks.

  Perhaps this is a matter of terminology. The billpay check is generated and sent by the bank. I took a close look at a billpay check for a recent bill I paid from my Alliant CU account.

The funds are withdrawn from my account prior to the bill pay check being issued. The billpay check is not drawn on my personal account and it does bear a signature of a bank/CU official. What is more important/relevant is that the funds for the check are not subject to my account having a balance at the time the check is presented by the bill payee. The funds were pre-withdrawn from my account and held by the CU (or billpay processor used by the CU).

It is possible other bank/billpay processors do this differently.

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cajundavid said:   OP did not actually stop payment on the check

You're the second person to say that. Where are you getting that?

araknis said:   so I put a stop payment on the check.

and THEN he told the contractor he stopped it.
  

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stanolshefski said:     Bill pay checks are personal checks.
Is this really true? I use Fidelity's bill pay which is handled by 3rd party company as far as I know.
I don't believe they have my account number on the checks they send (I don't even have check writing enabled on my account) but I suppose I could test it by sending myself a check.

rated:
Depends on the bank.
Some banks write a check out of your account
Some banks transfer the funds to their account then write a check out of a common account.

rated:
Glitch99 said:   
atikovi said:   
Glitch99 said:   
  And what exactly should Walmart have checked first?  The national check stop payment registry, that doesn't exist?  

  You sure about that? I remember maybe 20 or 30 years ago seeing signs at stores saying, "Your check welcome here" followed by the name of a company that verifies and insures that the funds are good. And that was pre-internet. Pretty sure these days you would just have to scan it and get back a ya or nay in seconds. When the bank issues a stop payment on the check, it should be by routing, account and check number. Very easy to enter into a registry automatically.

  You may think you are pretty sure, but you are wrong.

Most sane businesses accepting checks do use (or should be using) one of the methods described in https://en.wikipedia.org/wiki/Check_verification_service 

I'm familiar with ChexSystems, and they would have flagged a stop payment, for what it is worth.

Regardless of judgments on OP's methods being appropriate, WalMart has a hopelessly flawed system for cashing checks that transfers the burden to OP, unfairly in my opinion. I speak from experience - someone stole my ID, printed bogus checks with my address (but not using my bank info), presented a fake ID, and cashed the checks successfully at Walmart - and WalMart tried to come after me when the checks bounced. I told them to go pound sand; they deserve to eat the loss if their check cashing system is so obviously broken.
 

rated:
aurelius32 said:   
Glitch99 said:   
atikovi said:   
Glitch99 said:   
  And what exactly should Walmart have checked first?  The national check stop payment registry, that doesn't exist?  

  You sure about that? I remember maybe 20 or 30 years ago seeing signs at stores saying, "Your check welcome here" followed by the name of a company that verifies and insures that the funds are good. And that was pre-internet. Pretty sure these days you would just have to scan it and get back a ya or nay in seconds. When the bank issues a stop payment on the check, it should be by routing, account and check number. Very easy to enter into a registry automatically.
 

  You may think you are pretty sure, but you are wrong.
 

Most sane businesses accepting checks do use (or should be using) one of the methods described in https://en.wikipedia.org/wiki/Check_verification_service 

I'm familiar with ChexSystems, and they would have flagged a stop payment, for what it is worth.

Regardless of judgments on OP's methods being appropriate, WalMart has a hopelessly flawed system for cashing checks that transfers the burden to OP, unfairly in my opinion. I speak from experience - someone stole my ID, printed bogus checks with my address (but not using my bank info), presented a fake ID, and cashed the checks successfully at Walmart - and WalMart tried to come after me when the checks bounced. I told them to go pound sand; they deserve to eat the loss if their check cashing system is so obviously broken.
 

  Not a one of those check verification services mentioned in your link, aside from "Merchant Funds Verification" which has been virtually non-existent for over a decade, would've prevented OP's situation.  Or your situation, for that matter.  And even that funds verification, if even possible, is far from foolproof since money can be withdrawn after being "verified" (or other checks post first, or the account is closed, etc) yet before the check is actually presented.  Walmart actually uses the methods described, and checks being cashed are in fact rejected by their verification system rather regularly.  The whole check processing process may have it's flaws, but that's due to various laws and bank policies, not any merchant's process.

I have no clue what you mean by "ChecxSystems would've flagged a stop payment"?  CheckSystems doesnt maintain any account information, like account numbers, or even if an account exists - ChexSystems would literally have nothing to "flag" as far as any particular check goes.

rated:
fwuser12 said:   
 
The funds are withdrawn from my account prior to the bill pay check being issued. The billpay check is not drawn on my personal account and it does bear a signature of a bank/CU official. What is more important/relevant is that the funds for the check are not subject to my account having a balance at the time the check is presented by the bill payee. The funds were pre-withdrawn from my account and held by the CU (or billpay processor used by the CU).

 

  I use Chase and this is also my experience. one of my tenants who uses automated bill pay from his bank, however, doesn't have the funds deducted from his account until after I deposit the check.

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