Actually, I should think that this is illegal. It probably isn't, knowing the state of the law these days, but if not, it should be.
Someone contracts with a bank to hold funds and to disperse those funds with the proper document - "Pay to the order of..."
The said bank refuses to uphold the contract, in effect denying the account holder of these services, or demanding that the payee enter into another transaction in order to have the bank execute the previously contracted transaction.
It strikes me as a failure of fiduciary responsibility. I would think that they could be sued for this.
Perhaps they have, and won.
At any rate, I won't bank with Wells Fargo. Although I have thought about opening minimal savings accounts with a variety of banks, just so I could cash customer checks without them going through my bank.
But somehow, I don't want to do any business with these types of people.
It seems that NorthStar would be worth avoiding the hassle.