A third-party check is one that's written to an individual other than the person who wishes to cash or deposit the check, according to VyStar Credit Union. Bank policies on depositing third-party checks vary, and some banks refuse to take third-party checks due to potential fraud.
Some colleges and universities accept third-party checks for tuition when those checks come from a student's employer or scholarship sponsor. In those cases, the third-party organization must have billing records on file with the college, notes Portland Community College. In addition to restricting third-party checks, some banks also refuse third-party cash deposits to safeguard against money laundering, reports The Columbus Dispatch.