The Many Causes of Returned Checks
What do all those strange acronyms mean?
Most of us have been there at least once in our lives; a check deposited or written to someone was returned by the bank. It may be stamped with things like NSF, UCF, UTL, etc. What does that mean? Did I do something wrong? These strange and seemingly cryptic messages can be confusing, so here's a list of some reasons why a bank may return a check.
NSF or ISF - Not Sufficient or Insufficient funds
This one is pretty self explanatory. The account that the check is written off of doesn't have the funds to cover the value of the check. In most cases the check can be redeposited, unless otherwise noted on the check itself.
UCF, UFH or UF - Uncollected Funds Hold or Uncollected Funds
In this instance, the check has been returned because the account it was drawn off of does not yet have the available funds. It's a little different than insufficient funds because the balance is present but not yet collected. For instance, John may have deposited a check for $500 on Monday, and also written a check to Steve for $500 which he deposited to his account the next day. Since the initial check that John deposited won't clear until Wednesday, the check he wrote to Steve is returned because John's initial deposit has not yet been collected. These items are typically eligible for redeposit.
UTL - Unable to Locate
Checks are returned for this reason because the bank cannot locate the account associated with the presented item. This could be for a number of reasons, but the most likely cause is that incorrect information has been provided. Sometimes these items will indicate exactly which information is wrong, such as the account number or routing number. These items can not be redeposited; a new item is required from the account holder.
NCI - Non Cash Item
Returns for this reason are typically due to things like promotional offers, rebate coupons or gift certificates mistakenly being deposited as checks. Since these items are in fact not checks, they can not be redeposited.
UA or NA - Unauthorized or Not Authorized
Items are returned for this reason because the account holder disputes the authenticity of the payment, or the account has a special instruction such as 'no debits' or 'no drafts.' These items can not be redeposited.
RTM - Refer to Maker
Items returned with this code indicate that the payee should contact the account holder to inquire about why the item was returned. Banks will not give this type of account information to anyone but the account holder, and both parties may need to correspond in order to resolve the issue. This code is typically used when no other return codes apply.
Checks are returned for this reason because the person who initially authorized it has revoked their authorization. This option is available to account holders as long as they place the stop payment before the item in question is presented for payment. The account holder gives specific details about the check to the bank, who then return those items unpaid with the code Stop Payment. These items are not eligible for redeposit.
Items returned with the code Account Closed mean just that: the account associated with the check has been terminated. These items can not be redeposited because the account no longer exists, and a new check drawn off of a different account is required.
Frozen or Blocked Account
Returned items with this code are the result of the bank being required to stop all activity on the account in question. This could be due to an IRS tax lien or wage garnishment, a court order or other legal action. These items can not be redeposited.
Stale Dated or Expired Check
These items are returned because they have passed the expiration date set by the check issuer. Checks can expire after as little as seven days, or as many as one hundred and eighty, as determined by the individual institution. These items also can not be redeposited.
Items are returned for this reason because they are dated for some time in the future, or otherwise indicate that they are not valid until a future date. These items are eligible for redeposit on or after the date in question.
This occurs when the payee does not sign or stamp the back of their check, and is not the fault of the check writer. An endorsement is typically the check receiver's signature or a 'For Deposit Only' stamp. These items can be redeposited once they have been properly endorsed.
The most common cause for checks being returned for this reason is because the endorsement is illegible, doesn't match the sample on file, or was written below the line that says 'do not write below this line.' These items could possibly be redeposited if the error is correctable.
Items are returned for this reason when the check writer did not sign the check, or only one signature is present when two are required. These items can be redeposited once the missing signature is obtained.
If the bank's sample of an account holder's signature differs noticeably from the one on the item or appears damaged or altered, it will be returned for this reason. In this case, a new item must be obtained for deposit.
Altered or Fictitious Item
This return code indicates a discrepancy between the bank's records of the account holder and the item presented. Write overs, cross outs and other alterations should be initialed by the account holder, but may not always stop the item from being returned. This code may also indicate that the presented document is a forgery. Do not redeposit these items.
Item Exceeded Dollar Amount
Some accounts are set up with daily or per item dollar amount limits. The account holder is aware of these limits and items returned for this reason are not eligible for redeposit.
Hopefully this will be the only place anyone will see these codes. Feel free to visit my related hub about common check writing mistakes, which should help avoid having items returned for these reasons.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.