By: Edward L. Kelly
Your client, an individual, walks into Friendly Bank and presents for payment a check in the amount of $100.00, drawn on Friendly Bank and payable to the order of your client. The bank teller asks if your client has an account with Friendly Bank, to which the response is “no”. The teller then advises your client that Friendly Bank is happy to cash the check, but will impose a service fee of $7.50 to pay its own check, drawn by its own customer. Your incredulous client asks, “Can they do that?!”For those who have not recently cashed a check at a bank at which they do not maintain an account, charging a fee for doing so may come as a shock, but is now not only perfectly legal in Florida, but is the norm. Once upon a time, no one would have anticipated such a result. Florida law was generally interpreted to require a bank to settle a check “at par”; that is without a discount or fee. Specifically, Section 655.85 of the most recent recodification of the Florida Banking Code, adopted in 1992, provided that a financial institution could not settle a check drawn on it “otherwise than at par”. While the issue was not specifically litigated, this was generally presumed to mean that if you presented a check for $100.00 at the bank upon which the check was drawn, that bank was required to remit $100.00.
Federal Preemption of Florida Law
All of that changed, beginning in 2003, when, in Wells Fargo Bank of Texas, N.A. v. James, the United States Court of Appeals for the Fifth Circuit upheld an interpretation of federal law by the Office of the Comptroller of the Currency which permitted a national bank with a branch in Texas to charge a fee for cashing a check drawn on itself by someone who was not a customer of that bank, despite a Texas statute to the contrary. This position was upheld in 2011 by the United States Court of Appeals for the Eleventh Circuit (which includes Florida, Alabama and Georgia) in its decision in Baptista v. JPMorgan Chase Bank, N.A., involving an interpretation of Section 655.85. The Court upheld the dismissal of a class action upon the principle that federal law preempted the limits imposed by Section 655.85. Last year, relying upon another federal statute ensuring parity between local branches of banks chartered in other states and local branches of out-of-state national banks, the Eleventh Circuit, in the case of Pereira v. Regions Bank, extended the right to charge fees for the cashing of checks to local branches of banks chartered in other states. In December, 2014, the United States Supreme Court denied certiorari in the Baptista case.
Florida Gets in Line
Based on these decisions, the only banks remaining subject to the limitation contained in Section 655.85 were Florida state chartered banks. To level the field, the Florida legislature amended Section 655.85, effective July 1, 2014, to carve out an exception from the requirement that checks be settled “at par” in order to specifically permit a Florida chartered bank to charge a fee (and deduct it from the amount of the check) for paying a check presented in person by someone other than a customer of the bank. As a result, any local branch of a national bank or of a bank chartered in another state, as well as any Florida chartered bank, may charge such fees.
Conclusion
Of course, you may still cash your check at the drawee bank without charge if you have an account with that bank, and you may deposit the check to your account with your own bank and it will be settled at par. If you need to cash the check in person and are not a customer, however, be prepared to pay. Fees often vary but may run from $5 to $10, and can be more at some banks, depending on the amount of the check.
