Question: Can a bank charge a check cashing fee to non-customers?
Answer: Yes. The Department issued an August 31, 2001 press release regarding this matter. Since then, the court ruled that Texas law was not enforceable, therefore, financial institutions are allowed to continue charging a check cashing fee.
Question: Is there a limit that a bank can charge for processing non-sufficient items?
Answer: No. The charge only has to be disclosed. However, Business and Commerce Code Section 3.506 (b) limits the fee amount to $30.00 that any non-bank check holder or retailer can charge for a dishonored check.
Question: Are overdraft fees considered interest and subject to usury?
Answer: No. Overdraft (OD) fees are not calculated as interest. OD fees are associated with a “bounced-check” or “nonsufficient funds”.
Question: What information can a bank legally request from me when I cash a check?
Answer: The Texas Business and Commerce Code specifically requires a bank to verify the authenticity of an indorsement on any check presented to them, but there is no law or regulation specifying what procedures they should use. Each bank sets, by policy, what means of identification they will require before cashing a check. Some Texas financial institutions may participate in a "thumb-printing" program, that requires non-account holders to apply their thumbprint in clear ink next to their endorsement when cashing a check in a bank where they do not have an account. The Texas Department of Banking does not endorse nor object to this program. Banks are not required by law to cash checks for non-account holders. Some institutions refuse to do so as a means of preventing check fraud losses.
Question: The Texas Department of Banking is listed on my Opt In or Opt Out Notice as a point of contact. Do you process the notice?
Answer: No. The Department of Banking’s contact information is listed under the Consumer Complaint Notice section of the notice in case a consumer has a complaint against one of our regulated or registered entities. You will need to contact your bank directly to exercise your right to opt in for your bank to include you in a bank service or to opt out, to decline a service offered by your bank. The notice should contain a reasonable way to opt in or out, by paper, the bank website or electronic email, or a toll free number.
Question: Why am I getting another Opt Out Notice from my bank?
Answer:The Gramm-Leach-Bliley Financial Modernization Act of 1999 (GLB Act) and Regulation P, inherited by the Consumer Financial Protection Bureau, requires financial institutions to give consumers privacy notices on an annual basis that explain the institutions' information-sharing policy and practices.
Consumers have the right to accept or decline to have their information shared with certain third parties. These parties include financial institutions affiliates. A consumer cannot opt out of sharing information with companies that provide essential services or companies that provide marketing for their bank’s products or services.
An opt out request remains in effect until you contact the institution in writing or electronically and ask them to cancel it.
Question: I was a victim of identity theft and closed my bank account. My bank did not allow me to report my closed account to a check verification company. How do I report that I was a victim?
Answer: If your bank does not allow you to report your closed account to a check verification company, please contact us.
Question: What do I do if I am a victim of ID Theft or credit fraud?
Answer: If you believe that you are a victim of identity theft or credit fraud, it is recommended that you take the following steps:
- Contact any one of the three major credit bureaus (Equifax, TransUnion, Experian) and request that a fraud alert be placed on your credit file. Once the credit bureau is notified, they will notify the other bureaus.
- Notify the credit card issuer of the stolen card (if applicable)
- Notify the bank of the stolen checks or check card (if applicable)
- File a police report
- Contact the Social Security Administration if someone is using your Social Security number
- Contact the Federal Trade Commission to download a ID Theft Affidavit.
Question: My receipt list my full credit card number. Doesn’t this advocate identity theft and what is being done to change this?
Answer: Texas Business and Commerce Code §502.002 requires that a cash register receipt or other documents issued by a retailer for a credit card or debit card business transaction only reflect the last four digits of an account number. Expiration dates are prohibited from being printed.
Question: When can I have access to deposits made into my account?
Answer: The 1987 federal "Expedited Funds Availability Act" (Regulation CC) sets forth the maximum number of business days that funds may be held for collection (see below). Exceptions are permitted in special circumstances; however, the customer must be notified at the time the deposit is made as to the reason for and length of time of the hold period. Examples of special circumstances which could result in a longer hold period include: new accounts, large deposits, re-deposited checks, repeated overdrafts and doubts as to the collectibility of the deposited item. A reasonable period of time is defined as 1 additional business day for "on-us" checks, 5 additional business days for local checks, and 6 additional business days for non-local checks.
|Type of Deposit||Maximum Hold||Available Next Day|
|Local Check||Next Day||
$200 Effective July 21, 2011 (Dodd-Frank Act)
|Non-Local Check||Next Day||
$200 Effective July 21, 2011 (Dodd-Frank Act)
|New Account||Bank's Discretion||Up to $5,000 on cash or U.S. Treasury Checks|
|Large Deposit (over $5,000)|
|Local||7 business days||1st $5,000|
|Non-local||7 business days||Must be made available as if the check were not a large deposit. If a special hold is placed on funds, then $200 can be made available on the next day and $4,800 can be made available on the 5th day. The remainder will be made available on the 7th day.|
Question: What is the standard policy when a person deposits cash at a financial institution?
Answer: Per Federal Regulation CC § 229.10 Next-day availability, a bank shall make cash funds deposited in an account available for withdrawal no later that the business day after the banking day on which the cash is deposited, if the deposit is made in person to an employee of the depositary bank.
Question: How and when does the notice of funds availability need to be provided to me?
Answer: The funds availability notice must specifically state the availability periods for the various types of deposits that may be made to consumer accounts. The notice should be posted in a place where consumers making deposits are likely to see it before making their deposits, including ATMs. The notice is not required at drive-through teller windows or at night depository locations. The regulation requires that the notice of funds availability be on the front of all preprinted deposit slips. The notice only needs to state that deposits may not be available for immediate withdrawal. The notice is required only on deposit slips that are preprinted with the customer’s name and account number and furnished by the institution. This does not include counter deposit slips or on special deposit slips.
Question: Are deposits made through a customer's mobile phone (remote deposit capture) subject to Regulation CC?
Answer: No. Checks deposited through a mobile device such as a phone (remote deposit capture) are not subject to the funds availability requirements of Regulation CC. A check deposited through a mobile device is not a check as defined in Regulation CC. Regulation CC - 1029.2(k)(1) defines a "check" as "a negotiable demand draft drawn on or payable through or at an office of a bank." A picture of a check transmitted to the bank using the customer's mobile device is not "negotiable" and, therefore, not a check under Regulation CC's definition of the term. These types of deposits also do not fit in the ACH or wire definition for Reg CC purposes.
That being said, many banks apply the bank’s funds availability policy to these types of deposits. Keep in mind, customers might presume that such items would be subject to the normal check availability schedule, unless they are specifically advised otherwise, and then rely on that expectation. Many banks explain the funds availability of these items in the bank’s mobile banking agreement where customers might be more likely to notice the policy.
Question: I no longer receive my cancelled checks. Does the bank have to send me my original cancelled checks?
Answer: There is no law requiring that the original cancelled check(s) be returned to a consumer, however, the law requires that a legible copy of an item be provided upon request. Many banks are now providing imaged copies of checks to customers. By law, imaged copies of checks hold the same validity as an original item.
Question: Is there a limit to how many times a bank can run an insufficient check through for payment and collect an NSF fee?
Answer: The general practice for submitting a check is two times through the automated clearing process. The item can also be sent as an electronic item via the ACH network one time. After that, items are generally handled on a "collection basis" and result in higher fees.
Question: Can a bank pay checks that I’ve written in any order it chooses?
For example, if several checks are presented for payment in one day, only one of which is more than my balance, can the bank decide to post the larger item first and then the smaller items, even though this would result in more checks not clearing?
Answer: Banks have a right to establish their own policy concerning the order in which they process checks, as stated in the Texas Business & Commerce Code Section 4.303 (b). The Code states that a bank may pay "in any order" and is under no obligation to determine the time of day an item is received. If smaller items are paid first, then there are fewer overdrafts and fewer charges; however, mortgage and rent payments may be returned. Some banks feel that if larger items are paid first, then the most important items are not returned. Payment order may be noted in the deposit contract that customers sign when they open their account.
Question: What is the time frame that a bank is allowed to return a dishonored check?
Answer: In general, a bank has 24 hours, or 1 day, to return a dishonored check. The paying bank must return a dishonored item (ex. a check) before midnight of the banking day the item was received (Section 4.301, Texas Business and Commerce Code). Consumers should be aware that a check can be returned after this time frame if a problem exists with the item, such as a counterfeit, an alteration, forgery, or fraud. Your account may be charged with the dishonored.
Question: When is a check no longer valid?
Answer: Other than a certified check, a bank is under no obligation to pay a check which is presented more than six months after its date. However, Texas Business & Commerce Code §4.404 does allow a bank to honor a check after six months in good faith. Reference should be made to any provisions in the depository contracts.
Question: Can a bank accept and pay a post-dated check?
Answer: Yes. According to Section 4.401(c) of the Texas Business and Commerce Code, a bank may pay a check that is otherwise properly payable, even though payment was made before the date of the check. If a stop payment order is given to the bank prior to the date of the check, which describes the check with reasonable certainty, then the bank may not charge against the account.
Question: How can I stop payment on a check I have written?
Answer: Under Section 4.403 of the Texas Business and Commerce Code, a customer may order their bank to stop payment of any item payable from their account, as long as the order is received at a time and in a manner sufficient to allow the bank to act on it. While some banks may accept verbal stop-payments, an order is only binding if it is in writing. An oral stop payment is only effective for 14 days, while a written stop payment is effective for six months. In both cases the exact dollar amount should be indicated.
Question: What are my rights regarding unauthorized automatic teller machine (ATM) transactions?
Answer: Pursuant to Regulation E, the extent of a customer's liability on unauthorized ATM transactions is generally limited to the first $50 withdrawn. If however, someone whom the customer supplied the card and personal identification number to performs the transactions, then the transactions are generally considered to have been authorized. The customer is responsible for notifying the bank immediately when unauthorized transactions are discovered, which initiates an investigation by the bank.
Question: What are my rights and responsibilities when a check has been forged on my account?
Answer: Ultimately, the forging party is liable for items forged by them. However, banks do have a responsibility under Section 4.401 of the Business and Commerce Code to pay only authorized items from a customer’s account, and a forged check is not an authorized item. Most banks employ automated check processing techniques which do not verify the signature on each check to the signature on the deposit account. Under Section 4.406, the customer has a duty to discover and report unauthorized signatures or alterations with reasonable promptness. Typically, the depository contract will limit the discovery period to 30-60 days. Once reported, the bank generally must credit the item back to the account unless it can prove that the customer failed to comply with his or her discovery and reporting duties as imposed by the law. However, once a customer has notified a bank of a forgery incident, and has had at least 30 days to examine previous statements, he or she may not recover a loss on items previously forged by the same party and paid by the bank before it was notified. A customer can also be precluded from asserting against the bank if the customer was negligent in protecting his or her checks (Section 3.406).
Question: What are my rights when a check written to me was fraudulently endorsed by another party and paid?
Answer: Under the Texas Business and Commerce Code, items which are fraudulently endorsed are not legally negotiable, and should not be paid against the account of the check-writer. Texas Business & Commerce Code §4.401(a) codifies that a check or other item with a forged endorsement is not properly payable, since the person receiving payment was not the intended payee and has no right to the proceeds. However, the paying bank does not normally have an opportunity to ascertain the genuineness of the endorsement. Section 3.417 of the Code expresses that the responsibility lies with the bank that accepted the fraudulently endorsed item, because, under the code, the paying bank would have no knowledge that the signature of the drawer of the draft is unauthorized. Hence, the means by which a consumer may seek to recoup the misappropriated payments is to notify the writer of the check of the fraudulent endorsement, and ask them to issue another check. This means that the check writer’s bank would technically be liable for crediting the check writer’s account for the amount of the unauthorized charge. That bank would then collect under the warranty issued by the bank where the check was cashed or deposited, which in turn would seek to collect from the perpetrator.
Question: Electronic Check conversion – what is it?
Answer: When you make a payment by check, the information from the check is extracted – your name, account number, check number, bank routing number, etc. – and used to make a one time electronic withdrawal from your account.
Question: I wrote a check to pay a bill and the merchant or creditor who I wrote a check to, turned my check into an ACH debit. Can they do this?
Answer: Yes, however, the merchant or creditor converting the check must give you notice that the information on your check will be used to electronically debit the payment from your account. This notice can be given at in several different ways. For example in writing on your monthly statements or at the point of purchase (register). Electronic check conversions are a one-time electronic transaction.
Question: What is Mortgage Fraud?
Answer: Mortgage fraud is committed if a person intentionally or knowingly makes a materially false or misleading written statement to obtain a mortgage loan. Examples of criminal mortgage fraud includes, but is not limited to, illegally inflating property appraisals; concealing a second mortgage from a primary lender; and concealing or stealing a borrower’s identity.
The definition of mortgage fraud is permanent financing of 1-4 single family residences, and excludes interim construction loans.
To report mortgage fraud please contact us by calling 877-276-5554 or complete our Mortgage Fraud Report form and submit it to our office.
Question: Does the bank have a right to set-off, i.e. to remove funds from a personal account without authorization or notification in order to bring a loan current?
Answer: Yes. Section 34.307 of the Texas Finance Code states that a bank has the right of set-off. If you have a personal account and a loan at the same banking institution, and you are delinquent in your loan payments, the bank generally has a right to access your personal account without notification to you to bring the note current. This is usually addressed in the loan agreement and/or depository contract.
Question: Are there any maximum closing costs established regarding first lien real estate loans?
Answer: : No. However, there are requirements under the Federal Real Estate Settlement Procedures Act (RESPA) (12 USC Section 2601) for minimum disclosures on certain mortgage loans. This includes a Loan Estimate of the amount or range for each settlement charge the borrower is likely to incur no later than three (3) business days after the written loan application is received. No fee may be charged for the preparation of the Loan Estimate, Closing Disclosure, or the initial and annual escrow account statements. Note that second lien residential mortgages are heavily restricted so go to Consumer Financial Protection Bureau Regulation X for more information.
Question: Is there a limitation on the amount of funds I can be required to escrow on a mortgage loan?
Answer: Yes. RESPA generally limits escrow funds at settlement to the amount that would bring the accrual of taxes and insurance current to the date of the first full payment plus one-sixth of the amount of such charges to be paid during the following 12 months (i.e., a two month cushion). Please see the U.S. Housing and Urban Development and Consumer Financial Protection Bureau Regulation X for more information.
Question: Are there any limits on interest rates that may be charged on loans?
Answer: All consumer loans made by Texas lenders, except federally preempted first lien real estate mortgages, are governed by state usury limits, Some credit cards issued by out of state federally chartered institutions have rates allowed by other states. Detailed information can be obtained from the Office of the Consumer Credit Commissioner.
Question: Can a bank require credit life insurance as a condition of a loan?
Answer: Yes. A bank can require the assignment of credit life insurance for a loan. But a bank cannot require that the insurance be purchased from it or any affiliate according to the federal anti-tying laws (12 USC 1972, 12 CFR 225).
Question: What are the restrictions governing loan collection practices of banks?
Answer: The following limitations are provided in various laws and regulations:
- In attempting to collect money due on a loan or take possession of property securing a loan, a bank (or its agent) shall not use physical force or violence against any person or property.
- A bank has the right to contact any person in order to secure information concerning a borrower. However, the bank shall not solicit the payment of any debt from any person other than the borrower, the borrower’s spouse, a member of the borrower’s household, or a co-maker, endorser, surety or guarantor of the obligation.
- In attempting to collect money due on a loan or take possession of any property securing a loan, a bank commenced when in fact they have not.
- A bank shall not impersonate any enforcement officer or use any fictitious name.
Any complaints regarding collection practices should be directed to the State Attorney General's Office at (800) 621-0508. Consumer may also file a complaint with the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) with regard to the Fair Debt Collection Practices Act or FDCPA.
Question: How many home equity loans can I have?
Answer: A consumer can only have one home equity loan at a time.
Question: How much can I borrow?
Answer: Texans can borrow up to 80% of the value of their home.
Question: Can I refinance my home equity and when?
Answer: Yes. A home equity can be refinanced; however, it can be refinanced no more than once every 12 months and no earlier than one year after the closing of the original loan or a refinance. The terms of a home equity loan may be modified at any time.
Question: How much can I borrow on a home equity line of credit (HELOC)?
Answer: Texans may establish a line of credit of up to 80% of the value of their home.
Question: Are there limitations on the draws on a HELOC?
- The minimum amount that a consumer may draw at any one time is $4,000.
- Draws are not allowed whenever the outstanding principal balance of the loan exceeds 50% of the value of the value of the home (i.e., the value of the home at the time the loan was made).
- If the outstanding principal balance of a HELOC ever exceeds 50% of the value of the home (i.e., the value of the home at the time the loan was made), the consumer may pay the balance down to 50% or less of the value of the home and then make draws.
- Draws are not permitted through credit card, debit card, or preprinted solicitation checks.
Question: How does an account become "presumed abandoned", and what happens to abandoned accounts?
Answer: Accounts identified by banks as "presumed abandoned" are subject to escheat (be remitted) to the state. Under section 73.101 of the Texas Property Code, an account is classified as abandoned when: (1) it has been inactive (without any depositor-initiated activity) for at least three years, (2) the bank is unable to identify the location of the depositor, and (3) the amount of the account or the contents of the box have not been delivered to the comptroller in accordance with Ch. 74. An account is not considered abandoned if the depositor has another account at the bank that is in "active" status.
Question: How does an account become classified as "Inactive"?
Answer: In order to keep an account in "active" status (Section 73.003(b) of the Texas Property Code), an account holder needs to make a deposit or withdrawal at least once per year. The automatic crediting of interest to the account by the bank does not count to keep the account active. The Code does not require a bank to notify the depositor when an account becomes inactive. Section 73.003(a) of the Code prohibits a bank from service charging an inactive account.
Question: Whom do I contact to claim abandoned or unclaimed funds?
Answer: The Unclaimed Property Division of the Comptroller of Public Accounts at (800) 654-3463.
Question: Whom do I contact for a registered agent?
Answer:The Department does not maintain a list of registered agents for its regulated entities. Contact the Texas Secretary of State’s Corporations Division at 512-463-5555 for registered agent service of process inquiries.
Question: Are Texas financial institutions required to file registered agents with the Secretary of State?
Answer: The Texas Business Organizations Code (“BOC”) requires every domestic or foreign filing entity to maintain a registered agent and office in Texas. Additionally, the Texas Finance Code permits a Texas financial institution to appoint an agent for service of process (from SOS website).
The Department does not require Texas financial institutions, either state or national, to file registered agents. However, the institution may choose to file in the office of the secretary of state a statement appointing an agent authorized to receive service of process in accordance with Texas Finance Code §201.103.
Question: Who will be served if a Texas financial institution does not file a registered agent with SOS?
Answer: Designating an agent for serving of process makes filing with the designee mandatory only for actions relating to a customer account. If a Texas financial institution does not file a registered agent, any officer of the bank may be served for any actions. (See Texas Finance Code §59.008. Claims against customers of Financial Institutions).
Question : Are out of state financial institutions required to file registered agents with SOS?
Answer: An out of state bank, whether state or national, must file a registered agent with SOS. The Texas Business Organizations Code (“BOC”) requires every domestic or foreign filing entity to maintain a registered agent and office in Texas.
Refer to Texas Secretary of State FAQ’s and forms for registered agents.
Question: How does a bank file to establish or change a register agent with the SOS?
Answer: If the bank does not have a registered agent on file with the SOS, the bank must make an initial filing using State Form No. 706. The person completing the form should make sure to select 3A on the form indicating that the bank is a Texas financial institution filing pursuant to section 201.103, Texas Finance Code. The form has complete instructions included.
If the bank wants to change the registered agent on file with the SOS, State Form No. 401 is used. The form has complete instructions included.
Question: Who has access to consumer credit reports?
Answer: The Fair Credit Reporting Act of 1970 allows credit reports to be given to only those persons who have a legitimate business need for the information. However, a person always has access to his or her own credit report and can give permission for anyone else to receive it. Complaints should be reported to the Federal Trade Commission, which enforces the Fair Credit Reporting Act.
Question: What is a check verification company?
Answer: These are companies that provide deposit account verification services to its members to assist them in identifying applicants or customers who may have a history of account mishandling. This includes, but is not limited to “bad check” writers and repeat overdrafters. Some companies offer multiple services such as check conversion, check guarantee, check verification, and collection services.
Check verification companies are subject to the Fair Credit Reporting Act. If they offer collection services, they are also subject to the Fair Debt Collection Practices Act and other laws. The Federal Trade Commission enforces these laws.
Question: Can check verification companies keep me from opening an account with a financial institution?
Answer: It is up to each individual bank and credit union to decide if they want to open an account for you. Reports submitted to these companies generally remain on their files for five years, unless the financial institution or member removes it or the company is obligated to remove it under applicable law. The decision to delete a report is up to each member or subscriber and their individual policies. A member is under no obligation to remove accurate report of account mishandling due to payment. If an amount is collected, the member is obligate to report that payment has been made.