Is 3rd party cheque clearance legal? (e.g. moneyshop)

fayew_2

OK, I've searched the internet, had a very rude conversation with the MoneyShop and a 20 minute call with my bank and NO ONE can tell me the answer to this question.

Maybe some MSE forum users are savvy enough to know the answer?

I wrote a cheque to my brother. Instead of paying it into his account, he took it to MoneyShop because he couldn't wait for the cheque to clear, and they gave him the cash. (Less a fee, of course. My opinion on this will remain in my head.)

My question is, since my cheque was crossed a/c payee only, as all printed cheques are these days, how the hell can MoneyShop cash this cheque? What do they do with it? How can MoneyShop get the money that I wrote out to my brother?

Can anyone tell me who/what/how MoneyShop are able to do anything with a cheque that isn't actually for them?

Is what they are doing even legal? My own bank couldn't even tell me the answer! (I spoke to customer services and they transfered me to the branch, and no one knew).

It seems really dodgy to me. How does it work??? :question:

bengal-stripe

I do believe, your brother (or whoever) opens an account, presumably with 'MoneyShop's' bank. So, the cash goes into "Account Payee". It might be dodging the regulations by exploiting a loophole, but it cannot be illegal.

Why are you so concerned, didn't you want your brother to receive the dosh?

thenudeone

According to this: http://www.moneyshop.tv/cheque-cashing/ he must have provided ID.

Moneyshop have a consumer credit licence.

I presume that technically he has probably opened "an account" with them and therefore used a cheque payable to himself to pay into his "account", then immediately drawn on it.

limitation

He probably signed a form of some sort entitling the money shop to cash the cheque on his behalf, I'm not to sure how it works but i'd imagine its something along those lines.

fayew_2

Ahhhh, I see. That makes sense - that he would open an "account" with them, and clear the cheque that way. Thanks - it was really bothering me yesterday!!!!!

I was concerned because I think these places are vile (taking huge fees for doing b*gger all), but then I suppose if my brother cashes a cheque, losing a chunk of it, because he can't wait 5 days to buy some clothes, then who am I to judge.

Thanks for your replies - makes sense now. Wish I'd thought of that instead of spending 20 minutes on the phone to my bank!!

opinions4u

Completely legal.

Setting up an online transfer to his bank account will usually get the money to him instantly cleared.

Do this next time.

fayew_2

Yup. Already told him no more cheques!