We believe that the standard industry practice is to retain stop payment orders on checks for six months after the order has terminated. This corresponds with the IBA Guide to Record Retention, which recommends retaining stop payment orders for six months after termination (unless the stop payment relates to a preauthorized electronic fund transfer, in which case Regulation E requires you to maintain the order for two years). 

Having said that, a bank may choose to establish a different retention period. We do not recommend adopting a shorter retention period than the industry standard of six months. There are sensible arguments for adopting a longer retention period, particularly due to litigation risks. For example, a customer could challenge the payment of a check over a stop payment order for up to one year after receiving an account statement showing that the check has been paid. 

For resources related to our guidance, please see:

• 12 CFR 1005.13(b) (Establishes a record retention period of two years for maintaining records of compliance with Regulation E’s requirements, including the stop payment requirements for preauthorized electronic fund transfers in 12 CFR 1005.10(c).)

• UCC, 810 ILCS 5/4-403(d) (“. . . the customer must exercise reasonable care and promptness to examine the items and statement to discover any items improperly paid by the bank over the customer’s properly lodged stop payment order and must notify the bank promptly after discovery thereof. Failure of the customer to notify the bank within one year of . . . receipt of a statement containing the debit entry for said item and specifically identifying said item shall preclude the customer from asserting against the bank the improper payment.”)