Retail Banking Hold Error Leads to Rejected Chargeback

This case study delves into a retail banking incident where an individual's account was put on hold, leading to a rejected chargeback, despite evidence that the check had cleared.

ByZach Barreto


Published on February 14, 2024

Bank teller

Case Overview

This case study delves into an incident involving an individual who encountered a banking error following their paycheck deposit. The bank instituted a hold on the account, which subsequently led to a rejected chargeback. Despite the individual presenting records that confirmed the check had cleared and was issued to them, the bank proceeded to file a claim against them.

The bank's refusal to issue temporary credit or provide transaction records raised questions about its adherence to standard retail banking procedures and legal compliance.

Questions to the Financial expert and their responses


Could you elaborate on your professional background in retail banking, particularly dealing with errors and omissions?

I have dedicated over 35 years of my career as a bank regulator, where my responsibilities encompassed reviewing and evaluating various aspects of banking operations. This included back office operations and assessing policies, procedures, and practices related to funds availability, accepting deposits, and placing holds on deposits.


What is the standard procedure for placing an account on hold and what are the subsequent steps taken to resolve such a hold?

The standard procedures for placing an account on hold are guided by Federal Reserve Regulation CC (Reg CC). To resolve this case, it would be necessary for me to review the bank's Funds Availability Procedures to ensure they align with Reg CC guidance.

Additionally, I would need to ascertain what exact hold the bank placed on the deposit to verify its accordance with Reg CC. In this particular case, I would need to understand exactly what the bank did a hold error that resulted in a rejected chargeback to the account means and whether this was in accordance with Reg CC. I would also review the bank's procedures for allowing temporary credit while a hold was placed on the deposit.

Lastly, I would need to determine what the bank filed a claim for the person upon rendering of records proving that the check had cleared and was issued to the employee means. I am interested in providing my expertise on this matter.


Have you ever reviewed a similar case? If yes, could you please elaborate?

Yes, I am currently engaged in several cases involving similar issues. These primarily involve deposits where one of the hold exemptions allowed by law and regulation have been questionably applied by a bank.

About the expert

This expert boasts over 35 years of experience in financial compliance, with a focus on financial institution supervision. They are a commissioned national bank examiner and a certified specialist in both financial crimes and anti-money laundering. Their extensive career includes 30 years as a safety and soundness examiner for the Comptroller of the Currency, specializing in Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) examinations. Currently, they serve as a banking consultant for an independent consultancy firm, making them highly relevant to this case involving retail banking procedures and regulations.

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About the author

Zach Barreto

Zach Barreto

Zach Barreto is a distinguished professional in the legal industry, currently serving as the Senior Vice President of Research at the Expert Institute. With a deep understanding of a broad range of legal practice areas, Zach's expertise encompasses personal injury, medical malpractice, mass torts, defective products, and many other sectors. His skills are particularly evident in handling complex litigation matters, including high-profile cases like the Opioids litigation, NFL Concussion Litigation, California Wildfires, 3M earplugs, Elmiron, Transvaginal Mesh, NFL Concussion Litigation, Roundup, Camp Lejeune, Hernia Mesh, IVC filters, Paraquat, Paragard, Talcum Powder, Zantac, and many others.

Under his leadership, the Expert Institute’s research team has expanded impressively from a single member to a robust team of 100 professionals over the last decade. This growth reflects his ability to navigate the intricate and demanding landscape of legal research and expert recruitment effectively. Zach has been instrumental in working on nationally significant litigation matters, including cases involving pharmaceuticals, medical devices, toxic chemical exposure, and wrongful death, among others.

At the Expert Institute, Zach is responsible for managing all aspects of the research department and developing strategic institutional relationships. He plays a key role in equipping attorneys for success through expert consulting, case management, strategic research, and expert due diligence provided by the Institute’s cloud-based legal services platform, Expert iQ.

Educationally, Zach holds a Bachelor's degree in Political Science and European History from Vanderbilt University.

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