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Why am I refunded by cheque?

Cheque

You’ll usually find a coin or two when you clean out your sofa, but I was recently surprised to find an uncashed cheque. Unfortunately it was too old to cash in, so I had to let it go unclaimed – all seven pence of it.

That’s right: someone once sent me a cheque for seven pence. Not a stingy relative, I hasten to add, but a bank. This bank had closed my account and offered to refund me the money that was left in it. I offered to send them bank details, but for some reason they posted a cheque instead.

This is annoying, of course – who has the time or inclination to cash a cheque for seven pence? Some people who regularly visit their bank perhaps, but I simply let the cheque languish in a pile of papers and eventually recycled it.

Cheque refunds from energy suppliers

I’ve had similar refunds from energy companies. If I’ve switched my gas and electricity with a surplus on my account, I’ve received cheques for the balance. One company actually sent two cheques – one for the gas and one for the electricity.

When I discussed this issue with a colleague, he told me he’d once been given a very low-value cheque from an energy company, but the cheque itself was so huge it wouldn’t fit into the ‘auto-payment’ machines in the bank. Ten minutes of queuing later, he finally got his few pennies.

Refund it into my bank account

Now, I appreciate that money’s money and all payment systems are technically equal. A pound in cash will, after all, buy no more or less than a pound in my bank account. However, I can’t be alone in thinking that if I’ve paid someone in a certain way, I’d like the option to have my refund in the same way too.

I pay for almost everything either by card or by direct debit. Having brushed the dust off my chequebook I see the last one I wrote was about eighteen months ago. So why should companies send me refunds by cheque?

I so rarely visit a bank branch that it hardly seems worth making a special trip for a cheque for such a small amount. But I’m sure it’s far worse for people who struggle to get to their bank at all, such as people who live far away or have trouble travelling.

Have you been refunded by cheque when you would have preferred the money to put straight into your account? And would you ever cash a cheque for seven pence?

Comments
Member

I was due a £2 refund from SSE a few months ago. I asked them to just give the £2 to Dogs Trust but they said they NEEDED to send me a cheque out……it’s still on my desk as I’m looking at it now lol

We are in 2013 now. No reason for cheque’s when bank transfers are fine.

Member
Nigel Whitfield says:
16 October 2013

I’ve had similar, and with nPower when they overcharged people and were told they had to pay money back by Ofgem, they did even worse.

They sent a letter with a bar code, that had to be taken to the post office, where it would be scanned and you’d get cash. It said you had to do it within six months; I seldom go near the post office, and when I did, it was just under the deadline, but I was still told that it was too late.

On querying with nPower, they told me the expiry date wasn’t six months from the date on my letter, but from the date they first started sending them out; having a surname beginning with W, mine was one of the last sent out.

This sort of thing – refund cheques included – is a cynical ploy by companies to hold on to our money for as long as possible. In the case of energy companies, they very often have our bank details, allowing them to help themselves to the money whenever they like by direct debit.

They could, therefore, use those same details to pay the refunds in. To use a cheque instead is almost certainly going to cost them more, for each cheque that is actually paid in and processed. That they choose to use a cheque even so suggests to me that they know many people will lose it, forget to pay it in in time, or not claim the money they are owed for some other reason.

If they really cared about their customers, they would hand us back our money immediately via a BACS payment. Quite simply, they don’t care.

Member
Colin Samson says:
21 October 2013

You have SIX YEARS to get back to nPower and request repayment (from the date you were due to receive the money). Just because the bar code letter expired, it does NOT mean that they no longer owe you the money. It is YOUR MONEY, not theirs!

Get back to nPower straight away (& Ofgem if necessary) & say that you still require a refund of THE MONEY THEY OWE YOU. They could possibly be justified in making a small (must be reasonable) administration charge for this. However, as nPower misled you about the six months limit, I would insist that they refunded you in full, promptly & without any reduction.

Member

I refuse to accept cheques from anyone. The onus should be on the payer, and not the payee, to get the money into my bank account. Why should I have to make a special trip to the bank, where I never go during its opening hours? This is particularly objectionable when it’s a very small amount because the time and effort is disproportionate to the amount.

Therefore if a company wants to reimburse me for something, I give them a variety of payment methods, primarily bank transfer, but also cash by registered post (at their expense), PayPal (even though I despise PayPal), or they can deposit the cheque into my bank account themselves (by post or in a branch). If a company sends me a cheque, I tell them to cancel it and use another method.

It is even more absurd that some companies levy a surcharge if one doesn’t pay by direct debit, but those same companies will pay refunds by cheque. If they do so, they really ought to add their non direct debit surcharge to the amount of the cheque.

It is not acceptable that in this day and age companies still make payees jump through hoops in order to receive a payment, particularly a small one. Given that the banks’ plans to abolish cheques have been shelved, we ought to have legislation that prevents payment by cheque unless both the payer and payee explicitly agree to it.

Member

That’s really interesting, NFH – I have tried to ask for refunds via bank transfer before but still been sent cheques. Have you had luck with companies when you’ve asked them to cancel the cheque and refund you using another method? I might have to try this myself!

Member

Yes, several times I have refused payment by cheque and companies eventually give in. I use various tactics such as insisting that they send the cheque directly to my bank’s address or that they add a paper payment surcharge of £3 to the cheque to cover my time and expense of visiting the bank. Some companies are happy with the former, but not with the latter.

There was one occasion when I argued with a company by e-mail for six weeks. They had already agreed to reimburse the £3.92 postage costs of my returning faulty goods to them. They assured me that they would reimburse me via the same method as my original purchase, which had been bank transfer. They then insisted on reimbursing me by cheque, which I refused. The time and effort I spent on the e-mails was still a lot less time and effort than visiting my bank during working hours. Eventually they gave in and made the payment via bank transfer. Given that the amount was only £3.92, the six-week wait wasn’t a problem.

Even if I have to spend time on refusing to accept cheques, I remind myself that it’s less time than visiting the bank!

Member

If a company does send a cheque, tell them that you never received it and that they should send a bank transfer instead. Alternatively tell them that you have sent the cheque back to them but shred it instead. When a cheque appears to be lost in the post, some companies are more willing to do a bank transfer instead.

Member

NFH – Are you seriously suggesting that we tell lies just because we have been sent a cheque?

I would prefer companies not to send me cheques. If I do receive one, I put it in an envelope with a paying-in slip and put in the letterbox of my bank next time I am passing. If they persisted in sending cheques, I would ask for electronic transfers, but have not had to do this.

Member
NFH says: