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December 18, 2001
David Lee Valdina, Esq.
c/o United Insurance Agency, Inc.
P. O. Box 1013
Buzzards Bay, MA 02532-1013
Dear Mr. Valdina:
This letter is written in response to your correspondence of December 11, 2001 relative to a client of yours who had received a letter from Cape Cod Bank & Trust Company (the "Bank") notifying its business customers of the imposition of a $1.00 "convenience fee" to cash checks for non-customers of the Bank. The Bank is a national bank regulated by the Office of the Comptroller of the Currency.
As a general matter, the relationship between a bank and its customers with respect to deposit accounts is fundamentally a contractual matter. Although not applicable to the Bank, G. L. c. 167D, section 2, governing state-chartered banks, states that a bank may receive deposits "...upon such terms and conditions as may be agreed upon between the depositor and the bank...".
It is common procedure within the industry for a bank to implement a policy not to cash checks presented by individuals who have no account relationship with the bank. There is, however, a provision of law, which requires banks to implement a procedure to ensure that certain retirement benefit checks are cashed regardless of whether the retiree has an account with the bank. In most other circumstances, a bank is under no general obligation to cash checks and may implement terms and conditions applicable to its check cashing procedures. Accordingly, the imposition of a $1.00 "convenience fee" by the Bank to cash checks of non-customers would not be expressly prohibited by any provisions of state existing banking law.
Where it appears your client's interest in this matter may arise from the impact this policy would have on the cashing of employee payroll checks, you may wish to review the enclosed copy of G. L. c. 149, section 148, which contains a provision requiring employers paying wages by check or draft to provide reasonable facilities for cashing such checks at a bank or elsewhere, without charge to the employee. Your client may wish to inform the Bank of this statute and your client's potential liability as an employer, if it fails to arrange to have its employees's payroll checks cashed without charge. You or your client also may want to inform the Bank that this new fee may adversely effect the continued value of the Bank's services for it and other commercial customers with employee payrolls subject to G. L. c. 149, section 148. This statute is under the jurisdiction of the Commonwealth's Office of the Attorney General, Labor and Industries Division. The Labor and Industries Division can be reached at (617) 727-3465.
Joseph A. Leonard, Jr.
Deputy Commissioner of Banks And General Counsel
cc:Stephen B. Lawson
President and CEO
Cape Cod Bank & Trust