What Is the ‘Do Not Honor’ Reason for Denial?

When a financial transaction, particularly involving a check, fails to process, one may encounter the message “do not honor.” This phrase indicates a bank’s refusal to complete the payment. It serves as a general notification that the funds cannot be transferred as intended. This denial means the payment will not go through, requiring further investigation to resolve the underlying problem.

Understanding “Do Not Honor”

The term “do not honor” signifies a broad refusal to process a payment. It is a general code used by financial institutions when a transaction, such as a check, cannot be processed or cleared. For the payer, it means their intended payment will not be disbursed from their account. For the payee, it indicates that the funds they expected to receive will not be deposited into their account, leaving the transaction unfulfilled. This phrase is a default response when a bank declines a transaction without specifying the exact cause.

Common Causes for Denial

A “do not honor” denial can stem from several underlying issues. One frequent reason is insufficient funds, meaning the account from which the payment is drawn does not hold enough money to cover the check amount. Another common cause is a closed account, where the payer’s account is no longer active, preventing any transactions from clearing. A stop payment order, issued by the account holder to their bank, instructs the bank to refuse payment on a specific check.

Checks can also be denied if they are stale-dated, typically meaning they are presented for payment more than six months (180 days) after their written date. Conversely, a post-dated check, presented before its future date, may also be refused.

A signature discrepancy, where the signature on the check does not match the one on file with the bank, can lead to denial. Additionally, an account may be frozen or levied due to legal actions, preventing any outgoing transactions. Banks may also flag transactions as suspicious activity, declining them to prevent potential fraud.

Actions for the Check Issuer

If you issued a check that was returned with a “do not honor” notification, your immediate step should be to contact your bank. Inquire about the specific reason for the denial, as “do not honor” is a general term. Review your account balance and recent transaction history to identify any discrepancies or unexpected activity. This review helps in understanding if the issue was related to available funds or other account conditions.

Next, take prompt action to address the problem that caused the denial. This might involve depositing additional funds into your account, resolving any stop payment orders, or updating your signature if there was a discrepancy. Communicate transparently with the check recipient to inform them about the returned check and the steps you are taking to resolve it. Prompt communication and corrective action can help maintain your financial standing and relationships.

Actions for the Check Recipient

If you received a check that was returned with a ‘do not honor’ message, your first action should be to contact the check issuer. Inform them about the returned check and request clarification on the reason for the denial. It is important not to attempt to re-deposit the check without first understanding and resolving the underlying issue with the issuer. Repeated attempts to deposit a problematic check can lead to additional fees.

Discuss alternative payment methods with the issuer to ensure you receive the funds. Be aware that your bank may charge you a returned item fee for processing a check that was not honored. These fees typically range from $10 to $50, depending on your financial institution. Understanding these potential costs is important as you seek to resolve the payment issue.