What is a stop payment and how does it work? – Forbes Advisor

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Canceling a check or payment, also known as issuing a stop payment order, is not always a simple task and requires you to act quickly as soon as you discover a problem.

Here’s a detailed look at stop payment orders, how they work, how much they cost, and how effective they are.

What is a stop payment order?

A stop payment order is a request to reverse a payment before it has been processed. Types of payments you can cancel include personal checks and ACH payments, such as recurring monthly bill payments.

How a stop payment works

Individuals can contact their bank or credit union to request a stop payment. After providing the necessary payment information, the financial institution flags the check, if it has not already been processed, and stops clearing the check.

Stop payment orders typically expire after six to 12 months, depending on the bank or credit union. However, many banks allow you to renew a stop order if the check is still outstanding. Stop payment orders on ACH payments can last indefinitely. If your bank charges a blocked check fee, it may also charge a fee to renew the payment block order.

How to issue a stop payment order

Stopping a check is not difficult, but you must take certain steps to ensure success.

1. Take action. It is imperative to act quickly when requesting a stop payment in order to catch it in time. The moment you know there is a problem is when you should be working to get a stop payment order.

2. Check. Before contacting anyone, take the time to access your bank account online or on a mobile device to see if the payment has already been recorded. A stop payment order will not help you if you have a lost or stolen check that has been cashed. At this point, you will need to report fraud.

3. Gather control information. Your bank will ask you for specific information about your check to properly track it and ensure it hasn’t been processed. Details the bank might request include:

  • Photo ID
  • Account number
  • Routing number
  • Recipient’s name
  • Verification date, check date
  • Cheque number
  • Check amount

For ACH payments, you may be asked to provide other information, such as company name, account number, ACH merchant ID, and payment amount.

4. Contact your bank. The fastest way to implement a stop payment order is to call your bank directly, although you can make a request online or in writing. Some banks may ask you to complete a chargeback request form to start the process.

Contacting your bank by phone may require you to provide written notification within 14 days, or the chargeback may expire.

Stop payment orders take effect as soon as the bank authorizes your request.

5. Contact the beneficiary. Depending on why you are requesting a chargeback, you can contact the payee, if necessary, to notify them of the chargeback. Then you can arrange a new payment, if needed.

Reasons to stop payment on a check

There are several reasons a person may request a stop payment, including:

  • Incorrect information on a check
  • A check sent to the wrong address
  • A lost or stolen check
  • Insufficient funds in a bank account
  • A dispute regarding a purchase or services rendered

Whatever the reason, it’s best to act quickly when you want to stop a check payment.

Stop payment fees

Issuing a stop payment order often incurs charges for the bank account holder. Fees vary by bank. Here is an overview of stop payment fees at several popular banks.

Some of the banks mentioned above, like Chase and Bank of America, are waiving stop payment fees for premium bank accounts. Be sure to check with your bank for the amount of chargeback fees on your bank accounts. Some banks do not charge a stop fee on a lost or stolen blank check.

Do stop payment orders still work?

As mentioned above, you must make the stop payment request before the bank processes the check, and stop payment orders can expire after a period of time. If you choose not to renew an order, a payment may still be processed after expiration.

It’s also possible that a stop payment order is inadvertently ignored and your bank processes the payment. If this happens, the bank may be required to refund the service charge, including chargeback charges.

Not all payments are eligible for stop payment orders. For example, cashiers checks and money orders are not eligible for stop payment orders. Since both require an upfront payment, the funds are withdrawn from your account when issued.

Instead of stopping payment, you can choose to void a cashier’s check or money order, depending on the circumstances. Unfortunately, the cancellation process can take 90 days or more for cashier’s checks and up to 60 days for money orders. You will also be subject to cancellation fees in certain cases.

Are stop payment orders legal?

Stop payment orders are legal and offered by most banks and other financial institutions. There are certain situations where it is imperative to stop a payment. Stop payment orders also protect consumers.

However, stopping a payment does not leave you alone if you have entered into a contractual agreement that requires payment. Although you may have stopped a specific payment, this does not release you from any payment obligation. You may be subject to late fees and other negative consequences, including legal action.

The best way to avoid relying on a chargeback check order is to verify that the information on a check or ACH payment is correct before sending it. If you have concerns about a payment or have issues with a recipient, contact them before sending the payment.

What is a chargeback flag?

A stop payment flag is a security measure placed on certain unemployment claims to prevent payment. State unemployment agencies across the United States have seen spikes in large-scale fraud attempts. To combat this, some state Unemployment Insurance Agencies (UIAs) have placed stop-payment flags on certain unemployment claims that require additional identity verification to receive payment.

If you receive a notice of patent termination on your unemployment account, you will need to provide additional identification as instructed to receive benefits.

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Frequently Asked Questions (FAQ)

What happens if a stop check is cashed?

If a bank cashes a stop payment check, it may be liable for the cashed check.

When will the stop payment indicators be lifted?

If you receive a stop payment flag on your unemployment account, you must follow the instructions given by your national unemployment insurance agency and provide additional identification. Once your identity has been verified, the stop payment is lifted.

How do I stop automatic debit card payments?

To stop direct debit payments from your checking account, contact the payment recipient and let them know you are revoking the authorization. Then, contact your bank and inform them of this change. You can also issue a Stop Payment Order with your bank to stop automatic payments to the payee.


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