Question of the Week

Question: Are money orders considered cashier’s checks under UCC?

Answer: Generally, no. Usually, money orders are sold by the credit union but drawn on an account held by whoever the vendor is that issues the checks. So while money orders are generally considered to be “guaranteed” funds, they are not guaranteed by the credit union, but by a third party. This means that a stop payment could be placed on a money order, and claims to place a stop payment are usually done through that third-party vendor.

Now, if the credit union issues a product drawn on the credit union and calls it a “money order,” it would be more akin to a cashier’s check. Stop payments are not possible on cashier’s checks, although a person may file a claim if the cashier’s check is lost, stolen, or destroyed at a time 90 days or greater from issuance. Other than that, once issued, a cashier’s check is guaranteed funds.