Certain Michigan banking giants have employed a rather interesting method in attracting new customers. Having approached a local Branch Manager and questioning the helpful lady I can relate the argument used by these Banks. A recently (2001) enacted law allows banking establishments to charge a “check cashing fee” when cashing checks for people who do not bank with them. Initially this makes sense. The bank, you assume, is performing a service for the non-customer by cashing their check. Charging for this service only seems appropriate.
The service being performed by the bank is an actual service if they are not the establishment holding the funds that back the check. That is, if the check is not drawn on that particular bank. A bank cashing a check that it originally issued and authorized the account holder to fill out is fulfilling an obligation to the account holder and not the check casher.
If someone tried paying you by check and you did not believe that the bank on the check was legally obligated to reimburse you for the amount written on the check you would have no reason to accept the check. If you accepted the check and took it to the exact branch that issued the check, would you not be upset, when the cashier politely informs you that there will be a ten dollar “check cashing fee”? You look down at the check, verify that you are at the right bank, and take the ten dollar kick in the teeth because you’re not a customer. They are always quick to remind you that this “fee” could be avoided if you were to open an account. The pamphlets come out and incentives are mentioned.
I can only scratch my head and wonder why I would establish a legal relationship with a company that is going to charge recipients of my checks. I could hardly write a check in good faith knowing they would charge anyone looking to cash it. I couldn’t stand to see my money used as bait for new customers.
I was ambiguous on purpose, but what I state here can be found in Michigan’s Legislature, and is listed in the account information handed out with new accounts at two major Detroit area banks. I wonder how this doesn’t make the news, why is it such a non-issue? Banks are making huge profits but is it from making wise investments or by hosing their customers? I wonder if the politicians who enacted this law got anything out of the deal?