Consigned Items and Other Customer Services

Consigned Items

The most common items held on consignment by banks are unissued traveler’s checks, food stamps, U.S. savings bonds, and U.S. commemorative coins. Traveler’s checks have gained widespread popularity because of the possibility of refund if they are lost or stolen. A bank issuing traveler’s checks shares a fee or commission for issued checks with the consignor. Although the bank does not receive a fee for issuing United States savings bonds or food stamps, it does have use of the sale proceeds which it deposits in the Treasury tax and loan account until such time as a Federal Reserve Bank calls for them. Stocks of U.S. savings bonds are found only in a very few banks that provide payroll processing service to a large number of customers. The bonds are on computer printable stock and are generally stored in the computer operations area. Physical security and inventory controls should be sound; they should be similar to the controls in place for the bank’s own supply of negotiable forms.

National banks may not speculate by purchasing coins, such as rare coins, the value of which is based upon such factors as rarity, age, condition, a mistake in the minting, or other intangible factors. They may, however, hold commemorative coins on consignment or purchase them for resale. Commemorative coins are minted by the Bureau of the Mint for the Treasury Department. The price of commemorative coins is based on the value of the metal and production and distribution costs. Banks may take these coins on consignment and act as selling agent for the Treasury. The bank may also purchase an inventory of this type of coin for sale to its customers.

Banks generally maintain a working supply of all consigned items at the teller line or selling station. They also maintain a reserve supply under dual control in the bank’s vault. The bank is responsible for all unissued items and must maintain accurate inventories and accounting records on sales. Management should strive to maintain an inventory, which provides customers with adequate selection, without being excessive.

A law specifically prohibits banks from handling lottery tickets. As defined in 12 USC 25a, this prohibition includes making, taking, buying, selling, redeeming, or collecting lottery tickets. Banks may, however, accept deposits of state-sponsored lottery ticket sales proceeds.

Previous: Collection Items Next: Internal Controls