Has anyone cashed a check that says pay to the order of cash? That's legal, right?
Because I deposited it, and I got a deposit confirmation, and then later on they closed my account and removed the money without even notifying me.
What did I do wrong?
At least in the US: That's an old convention for a "bearer check", depositable to any account. Insecure, of course, but when checks were more common this was sometimes a desirable option.
There's a reference to this in Mel Brooks' movie, The Producers, where one of the women being swindled has the line (approximately) "I've made the check out to Cash, as you asked... That's a funny name for a show!"
HOWEVER, that is true only if the check was valid, properly signed and has not been stopped or bounced. If someone lost it and you found it, they probably immediately requested it be stopped, in which case the bank did exactly the right thing by pulling the money back, though it would have been polite for them to actively advise you that the check bounced.
The check could also have bounced for lack of funds in the account, or otherwise failed to go through.
In general, until a check actually clears through the system, you can't be absolutely sure the money will be there. Unless it is a cashier's check/bank check, written against the bank's assets rather than those of a depositor. And even then, if the check was altered or otherwise invalid, it will be rejected, even if it is initially accepted.
If someone sent you this check, you may have been scammed. See other questions with the "scam" tag for details of kited/fraudulent check abuses. If that is what happened, you can wave goodbye to any of your own money you put into the transaction; unless you report it and they catch the scam artist and:are able to recover any of the funds, you will never see it again.
If something looks suspicious, always stop to verify it in detail.
Forgery would also explain why the bank took the unusual step of closing your account. If they think you were deliberately trying to deposit a forged check, they don't want you as a customer. Ditto if this was the only money in the account, of course; having the very first deposit bounce would look extremely suspicious.
Yes, it is legal to deposit a cheque that says pay to the order of Cash. It is also legal to deposit a cheque that is payable to you. In neither case are you guaranteed that you actually have the money the cheque claims to provide you.
The cheque may have been stopped by the person who wrote it, either because they lost it or because they are deliberately trying to scam someone. The cheque may be forged. Or it may just have been written on an account that doesn't have enough money in it to cover the cheque. When any of these things (and many more possibilities) happen, the cheque fails to clear and the money that had been put into your account is removed. This is legal and how things work with banks. Ordinary cheques are not money, they are just the promise of money, and sometimes, that promise isn't kept.
This removal doesn't normally mean that they close your account, but it's possible the bank was concerned that your behaviour in this wasn't entirely up to their standards, so they would rather not have your business. This is also legal. You can ask the bank to explain further if you feel that you did nothing wrong, but I expect it would be quicker and easier to take your business to a different bank. And in the future, if someone wants to pay you by cheque, remember that it's only a promise of money. Many businesses no longer take cheques, and with good reason.
There is no real difference between depositing a check made out to cash and a check made out to you personally, unless there is some suspicion that the check was stolen or obtained via fraud. Like any check, while the bank MIGHT give you immediate access to the funds on the premise of good faith, they have every legal right to revert that if the check is eventually not honored by the institution it was written on, for any of a number of reasons, the most innocuous and most common of which is that the writer does not have funds available to cover the check.
If you have a history of writing bad checks, or of depositing bad checks, then the bank might well not want your business any more; they might even report you to a central clearinghouse of undesirable bank customers.
You did not deposit MONEY, you deposited documentation of a promised financial transaction which did not come to pass.
