IBA Compliance Connection

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We sometimes process withdrawal tickets without a customer’s signature. They instead are filled out by a banker and state “Per (Banker Name)” or “Per Phone Conversation” on the signature line. In some cases, the teller makes out a cashier’s check for the withdrawal, and in other cases, the teller withdraws cash, and the cash sits at the bank until the customer comes in. Should we be accepting these withdrawal tickets?

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We are not aware of any law or regulation prohibiting this practice, but there is a risk a customer could claim that a withdrawal ticket was unauthorized and demand a refund. If your bank does not have a written request corresponding with these withdrawal tickets, it may be difficult to prove that they were authorized when a customer claims that a withdrawal was unauthorized.

The Uniform Commercial Code (UCC) applies the same general rule to unauthorized withdrawal tickets as it would to unauthorized checks: the bank is liable for any unauthorized withdrawals. The ordinary UCC exceptions also would apply; for example, your bank might not be liable if a customer fails to provide notice of the unauthorized withdrawal within a reasonable period of time.

Additionally, the practice of withdrawing cash before a customer arrives to pick it up in person seems excessively risky. We do not recommend withdrawing cash until a customer can authorize the withdrawal and pick up the cash in person.

For resources related to our guidance, please see:

  • Illinois UCC, 810 ILCS 5/4-401(a) (“A bank may charge against the account of a customer an item that is properly payable from the account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank.”)
  • Illinois UCC, 810 ILCS 5/4-104(a)(9) (“‘Item’ means an instrument or a promise or order to pay money handled by a bank for collection or payment. . . .”)
  • Newell v. Newell, 406 Ill.App.3d 1046, 1050 (3rd Dist. 2011) (“[A] saving account withdrawal slip is an ‘item’ as defined in section 4-104(a)(9).”)
  • Illinois UCC, 810 ILCS 5/4-406(c) (“If a bank sends or makes available a statement of account or items pursuant to subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. . . .”)