Chase recently introduced a system at their ATMs that no longer requires people to insert checks into an envelope for deposit. Instead, they put the bare check into a reader, and the ATM reads and determines the amount of the deposit. We've never seen it fail to read a check properly, but we've never inserted one with red ink before.
However, Judy Lackey and her husband, Ethan Sorrelgreen, each received a check for $100 from Sorrelgreen's grandmother for Christmas. The grandmother used a red pen to write the checks. When Sorrelgreen deposited the checks into a Chase ATM on December 28, the machine had a problem reading the checks, so he manually overrode the amounts. Thinking all was well, they left town for New Year's and returned on Sunday, January 2nd.
On Monday, Lackey went online to pay their mortgage and discovered that neither of their paychecks had been direct-deposited into their checking account. The reason, she discovered, is because their account had been closed due to fraud. She said Chase told them,
"[...] there was absolutely nothing we could do about it. They said that they would send us the funds remaining in our account in 10 days."As Lackey discovered when she went directly to a bank office, the account had been marked for fraud because the checks written in red ink had been scanned as blank. Lackey said,
"Clearly no human ever looked at the checks, as they were decidedly not blank. They made no effort to find out what had happened, instead just immediately closed our account."The bank manager she spoke to said he could not reverse the decision. At wit's end, Lackey went to the San Francisco Chronicle for help. The issue has since been sorted out.
There are a few teachable moments here. One, for Chase, is to not close an account without some sort of human review. However, another, for consumers, is to not try to override Chase ATMs; if it can't read the check, deposit it manually in the bank. Chase should also modify their banking software to tell consumers that if the machine can't read a check, don't try to deposit it (although they probably won't as most consumers would be annoyed by that, not realizing they could end up in worse trouble). Oh, and don't use red ink when writing a check.
Finally, a cautionary note that probably applies to the Terms of Service at all banks, not just Chase. Chase's ToS says the bank has the right "to close the account at any time" without notice. In the case it does that, it is not liable for any fees or bounced checks, although in the above case they agreed to refund any fees.
