An effort by First Union Corp. to direct noncustomer check cashers out of its Florida branches has sparked a lawsuit alleging violations of state and federal banking laws.

The lawsuit, filed in Miami federal court two weeks ago, takes issue with First Union's practice of charging $1 for each check cashed by a person who does not have an account at the bank. First Union began charging the fee last summer in Dade County and rolled it out statewide in September.

In the lawsuit, plaintiff Stephen Stefiuk claims that First Union implemented the fee to push consumers into opening bank accounts. He accuses the bank of violating Florida law by refusing to honor the checks and the National Bank Holding Company Act by tying the fee to a refusal to open a bank account.

"People are outraged about this. Cashing checks is part of what banks are supposed to be doing," said Gerald Richman, the plaintiff's attorney.

Mr. Richman is seeking class-action status for the suit.

Officials with First Union, Charlotte, N.C., said the bank is trying to discourage time-consuming and costly transactions for noncustomers in favor of better service for existing customers.

"We wanted to do this to get some of the traffic out of the lobby," said Ken Darby, a First Union spokesman.

Mr. Darby said First Union is offering to open free accounts for the check cashers and to help them set up direct deposit services with a competing bank or credit union so they can access their funds there.

He added that pulling the check-cashing fee is "a possibility."

The bank's lawyers are scheduled to meet with the plaintiff and his attorney this month and have not yet filed a detailed answer to the complaint.

First Union is not alone in taking heat for its fees. Its Charlotte neighbor, NationsBank Corp., recently dropped surcharges levied on counter checks and deposit slips after a public outcry.

But First Union has a history of sticking to its strategies, controversial or not. Though a plan to thumbprint noncustomer check cashers generated significant opposition in many markets, it was expanded throughout the franchise last year.

Jerry Hergenroeder, a vice president at Speer & Associates, Atlanta, said First Union's strategy was sound on its face. But it might haunt the company in the form of community protests.

"Overall it's the right thing to do. But they need to be careful," he said.

"If you're in the merger mode, it's not a good thing to do. The people coming in cashing checks are ... those in the lower income bracket, people who don't bring a lot of value to the bank. So the people who don't have money aren't being served. You can get stung by the CRA thing."

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