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Members are often confused about the implications of issuing a stop payment order on a check that has already been issued. To help credit unions educate their members about this process, the League has outlined the steps involved with issuing a stop payment and the ramifications members should consider.
What Is a Stop Payment Order?
Stop payment orders are a request from an account holder to their financial institution to not process a payment. These orders are offered by credit unions and other institutions—typically for a fee. A stop payment order can often be useful in helping a member avoid fraud, negating incorrect details on a check to issue a correct one (in the event of the date, amount, or payee being wrong), and/or voiding payment as a result of cancelled goods or services. There are, however, potential negative implications that members should keep in mind when placing a stop payment order on a check that has already been issued.
To place a stop payment order, members should act as quickly as possible to get ahead of the pending payment. One way for members to begin this process is by confirming that their check has not already been cleared. Then, they should compile all the information related to the check (i.e. the account number, check number, the payee, amount, and the date), and contact their credit union to initiate the stop payment order. After the credit union has been contacted, they should inform members of any fees associated with issuing the order as well as any expiration dates associated with the stop payment.
Generally, financial institutions and other check cashing facilities will honor stop payments placed on personal checks if enough notice is given. However, it is crucial for members to realize that as soon as they write a check and hand it to a payee, they could still be responsible for the funds of that check even if a stop payment was issued. This might happen if the payee cashes the check before the stop payment order is processed. As a best practice, it is always helpful to encourage members to maintain a cushion of funds in their accounts to cover any miscalculations, overdrafts, fees, and even the possibility of a check being cashed before the stop payment order can be implemented.
After issuing a stop payment, members should monitor their accounts and bank statements for any charges. If their payment is processed after the stop payment order has been implemented, members can dispute the charge. Members should always be encouraged to keep copies of communications related to a stop payment in case they need to dispute it.
Draft Messaging for Credit Union Use:
If you would like to educate your members about the stop payment process, the League has created sample social media copy and associated graphics for Facebook, LinkedIn, X, and Instagram. We hope you will utilize these ready-to-go materials to help your membership better understand stop payment orders. In your communications, we recommend adding specific details about your credit union’s stop payment policies and procedures.
Lastly, a condensed version of what we outlined above is summarized below in case your credit union is interested in covering this topic in your quarterly newsletters or on your website.
Sample Social Media Copy & Graphics:
Did you know that if you issue a stop payment order on a check, you could still be liable for the funds if it is cashed before the stop payment is implemented? Additionally, there are often fees and expiration dates associated with stop payments. Before issuing a stop payment order, be sure you have all the information you need to make an informed decision. You may also want to consider alternative electronic payment methods in place of checks. Contact our credit union with any questions and/or if you need guidance.
Shortened copy to not exceed X’s character limit:
If you issue a stop payment order on a check, you could still be liable for the funds. Fees and expiration dates may also be associated with them. Before issuing one, ensure you have all the information needed to make an informed decision.
Sample Social Media Graphics:
Facebook/LinkedIn (right-click to download):
Instagram (right-click to download):
X (right-click to download):
Sample Newsletter Blurb:
Stop payment orders are a request from an account holder to not process a payment. This can be helpful in avoiding fraud, negating incorrect details on a check to issue a correct one (in the event of the date, amount, or payee being wrong), and voiding payment due to cancelled goods or services. However, there are also implications involved with placing a stop payment order on a check that has already been issued.
Generally, financial institutions and other check cashing facilities will honor stop payments placed on personal checks if enough notice is given. However, it is crucial to know that as soon as you write a check and hand it to the payee, you could still be responsible for the funds of that check even if you issue a stop payment! This could happen if the payee cashes it before the stop payment order is processed.
After issuing the stop payment, we recommend you monitor your accounts and bank statements for any charges. It is also a best practice to keep all files and communications related to the stop payment in the event you need to dispute it. Lastly, we always recommend maintaining a cushion of funds in your accounts to cover any miscalculations, overdrafts, fees, and even the possibility of a check being cashed before the stop payment order can be implemented.
When in doubt or facing confusion about what to do, contact our credit union to talk through the best course of action. We are here for you and always prioritize what is in the best interest of our members.