The bank placed a hold on a cashier's check that later turned out to be fraudulent. Aren't cashier's checks supposed to be honored immediately?

Generally, cashier's checks may be made available by the next business day after the banking day on which the check is deposited. The bank may require you to use a special deposit slip if you want the funds to be available on the next banking day.

A bank can place a hold on the amount of the check deposited in excess of $5,000, but the first $5,000 generally must be made available in accordance with the bank's normal availability schedule. Additionally, a bank can place a hold on the cashier’s check if it has reasonable cause to believe the check is uncollectible from the paying bank. In certain circumstances, if the deposit is made under emergency conditions, made to a new account, made to a repeatedly overdrawn account, or involves a check that was returned unpaid and then redeposited, the bank may also be able to put a longer hold on the check.

However, always remember that funds may become available to you before the bank has been able to verify the check. You may end up withdrawing the funds before the bank knows that the cashier's check is fraudulent.

If the cashier's check is fraudulent, the bank may charge the cashier's check back against your account or obtain a refund from you. In addition, you may want to review the Account Agreement you received when you opened the account, as it explains the availability process.

July 2017