Michigan State University
Controller's Office

Administration Bldg
426 Auditorium Rd, Rm 305
East Lansing, MI 48824
517 355-5020

SECTION 14: Returned Checks/ACH Payments

Last updated: December 2010

I. General

  1. Checks and ACH payments (i.e., electronic debits to a customer’s bank account) are returned to the Cashier’s Office for a variety of reasons.  The most frequent reasons for a returned item include: non-sufficient funds, account closed, no account/unable to locate, invalid account number, stale-dated (at least 180 days old), post-dated, and stop payment.
  2. The departmental account to which the payment was originally credited will not be charged back to the department unless payment for the returned item cannot be collected in the time frame described in the returned item process outlined below.

II. Returned Item Process (In General)

  1. Upon receipt of a returned item, the Cashier’s Office will attempt to notify the debtor of the returned item by mailing the debtor a Notice of Returned Item.  A service fee of $25 will be added to the outstanding balance of the returned item.  The debtor will be given three weeks to pay the balance of the returned item in full.  If the debtor has not paid the balance in full by the end of the three-week period, a second notice will be mailed to the debtor extending the deadline by an additional three weeks.
  2. An outstanding balance on the returned item at the end of the six-week period will be charged back to the department that originally received the credit for payment.  The chargeback process is completed on a monthly basis.  Notice of the chargeback will be attached to the E-Doc in EBS.  Only the original amount credited to the department will be charged back.  The description of the chargeback will be shown in EBS as "Past Due Returned Items".
  3. At the same time as the departmental chargeback, any outstanding balance on the returned item after the initial six-week period will be forwarded to the Delinquent Receivables department for further internal collection efforts or with the help of a professional collection agency.  If collection efforts are successful, the funds will be credited back to the department net of a collection fee.
  4. Any payment received by the department for a returned item should be forwarded to the Cashier’s Office, Hannah Administration Building, 426 Auditorium Road Rm. 110. Do not deposit the payment for the returned item into the department’s account.  Debtors with questions regarding returned items should be directed to the Cashier’s Office, 517-355-5023, returneditems@ctlr.msu.edu.
  5. Acceptable forms of payment on a returned item include cash, cashier’s check, or money order.  Replacement checks will not be accepted.  Partial payments on returned items are not accepted.
  6. Outstanding returned item reports are generated on a weekly basis for departments with one or more outstanding returned items.  This report is given for informational purposes only.  Departments should not attempt to collect on a returned item.  Any information relative to collecting a returned item should be reported to the Cashier’s Office.

III. Returned Items From Students

  1. When a returned item is identified as payment applied toward an account belonging to an MSU student, an enrollment/registration and transcript hold is immediately placed on the student’s account.
  2. If the student’s account remains unpaid, other actions are possible, including the cancellation of registration if the item was used to complete the registration process.  Additional measures are outlined in Student Life and Academic Programs.

IV. Bad Check List

  1. When three or more items from the same debtor have been returned to the Cashier’s Office, the debtor’s name is placed on the Bad Check List. All future payments to the University from debtors on the Bad Check List must be made in the form of cash, cashier’s check or money order.  No personal checks or ACH payments should be accepted by any department from debtors on the Bad Check List.  Each department that accepts payments by check or ACH is responsible for reviewing the Bad Check List.
  2. The Bad Check List is distributed at the beginning of each month to all departments that request a copy.  Departments that would like to be added to or removed from the monthly distribution of the Bad Check List should contact the Cashier’s Office, 517-355-5023.
  3. Generally, a debtor is eligible for removal from the Bad Check List when one year has passed since payment in full of their last returned item.  A debtor will be re-added to the Bad Check List if any future returned items for that debtor are received by the Cashier’s Office.  The Cashier’s Office reserves to right to add or remove a debtor as it deems appropriate.