Will Bank of America Cash a Third-Party Check? The Expert’s Take

The short answer is this: Bank of America generally does not cash third-party checks for non-account holders. If you are not a Bank of America customer and you’re trying to cash a check made out to someone else (who then endorsed it to you), you’ll likely encounter a roadblock. Let’s dive into the reasons why and explore your alternatives.

Why Bank of America Hesitates with Third-Party Checks

Think of third-party checks as a financial handshake agreement. Person A (the payer) writes a check to Person B (the payee), who then signs the back to transfer it to Person C (you, the third party). While seemingly straightforward, this process introduces layers of risk for the bank.

The Risk of Fraud

The primary concern is fraud. It’s far easier to counterfeit a check or intercept and forge an endorsement than it is to commit fraud on a direct deposit. Banks, like Bank of America, have a responsibility to protect themselves and their customers from fraudulent transactions. Third-party checks significantly increase that risk.

The Know Your Customer (KYC) Regulations

Banks are legally obligated to adhere to Know Your Customer (KYC) regulations. These regulations require them to verify the identity of individuals conducting financial transactions and to understand the nature of their business relationship. Cashing a check for a non-customer, especially a third-party check, makes this process much more difficult. They lack the established history and documentation they have with their own account holders.

Burden of Proof

If a problem arises – the original payer claims the check was fraudulent, for instance – Bank of America faces the burden of proving the legitimacy of the third-party transaction. This can be time-consuming and costly, particularly if they don’t have an existing relationship with all parties involved.

Alternatives to Cashing a Third-Party Check at Bank of America

Since going to Bank of America may not be an option, let’s consider what you can do:

Open an Account

The most direct solution is to open an account at Bank of America. Once you’re a customer, cashing checks – including third-party checks endorsed to you – becomes significantly easier, although approval will still depend on the check amount and the account holder’s standing.

Deposit the Check into Your Own Bank Account

The easiest option is often to deposit the check into your own bank account. This avoids the need for Bank of America to get involved at all. However, be aware that your bank may place a hold on the funds, especially for larger amounts or if the check is drawn on an unfamiliar bank.

Cash the Check at the Payer’s Bank

Another option is to cash the check at the bank the check is drawn on (in this case, Bank of America, if you know the payer is a BoA customer). However, even this isn’t a guaranteed success. While the bank can verify the account has sufficient funds, they may still be hesitant to cash it for a non-customer, especially if it’s a third-party check.

Check-Cashing Services

Check-cashing services like those offered at Walmart or some grocery stores are another avenue. These businesses often cash checks for a fee, and they may be more willing to handle third-party checks than a traditional bank. Be sure to compare fees and understand their policies before using these services.

Ask the Original Payee to Cash It

The simplest solution might be to ask the person who the check was originally made out to (the payee) to cash it and then give you the funds directly. This avoids the complications of the third-party endorsement altogether.

Mobile Check Deposit (with Caution)

Some banks allow mobile check deposit through their apps. While tempting, attempting to deposit a third-party check via mobile deposit can be risky. The bank may later reject the check after the funds appear available, leading to overdraft fees and other complications. Proceed with caution and check with your bank first.

FAQs About Third-Party Checks and Bank of America

Here are some common questions I frequently encounter on the topic of third-party checks and Bank of America:

1. What is a third-party check?

It’s a check made out to one person (the payee) who then endorses it over to another person (the third party) by signing the back and writing “Pay to the order of [Third Party’s Name]”.

2. Why would someone use a third-party check?

Sometimes, the original payee doesn’t have a bank account or has difficulty cashing the check themselves. They might endorse it to someone they trust who can cash or deposit it.

3. What does “endorsement” mean?

Endorsement refers to signing the back of the check to transfer ownership to someone else. It’s usually required to cash or deposit a check.

4. What identification do I need to cash a check at Bank of America as a non-customer?

Even if Bank of America were to cash a check for a non-customer, you’d need a valid government-issued photo ID, such as a driver’s license or passport. Be prepared to provide your Social Security number as well.

5. What are the fees for cashing a check at Bank of America if I’m not a customer?

While not all branches will do it, if they agree, fees can be quite high for non-customers, exceeding what you might pay at a dedicated check-cashing service. Call ahead to ask, so you are not surprised.

6. Can I deposit a third-party check into an ATM?

Generally, no. ATMs are designed for deposits into existing accounts and don’t usually accept third-party checks. Moreover, if it is accepted at the ATM, there’s no guarantee the deposit will be successful.

7. What if the check is for a large amount?

A large check will almost certainly be rejected for cashing as a third-party check at Bank of America. Banks scrutinize larger amounts more closely due to increased fraud risk.

8. What if the check is from a government agency (e.g., tax refund)?

Even checks from government agencies are subject to the same rules. Bank of America is still unlikely to cash a third-party check, regardless of the issuer.

9. What if the original payee is deceased?

Cashing a check endorsed by a deceased person is generally illegal and fraudulent. The check should be handled as part of the deceased person’s estate.

10. Can I cash a payroll check that’s made out to someone else?

Payroll checks are particularly sensitive. Bank of America is extremely unlikely to cash a third-party payroll check due to the high risk of fraud and potential legal implications for the employer.

11. What is the best way to avoid issues with third-party checks in the future?

Encourage the person who is paying you to use direct deposit or to write the check directly to you. Alternatively, having both parties present with valid identification at the bank where the check is drawn could improve your chances, although it’s still not guaranteed.

12. Are there any exceptions to Bank of America’s policy on third-party checks?

While rare, exceptions might be made in specific circumstances, such as when both the original payee and the third party are present at the bank, both have accounts at Bank of America, and can provide satisfactory identification and explanation. However, this is entirely at the discretion of the bank branch manager.

In conclusion, while technically possible under specific circumstances, the odds of Bank of America cashing a third-party check for a non-account holder are slim. It’s best to explore alternative options like opening an account, depositing the check into your own bank, or using a check-cashing service to ensure a smooth and successful transaction.