How to Address Two Common Check Fraud Situations
Account Holder: “I wrote a check and someone forged the endorsement and cashed the check.”
In this scenario the Bank of First Deposit warrants the endorsement. According to UCC3-4 the Paying Bank may file an adjustment for 3 years. The form you would need to complete is a Warranty Claim Letter.
Fraudulent Maker’s Signature
Account Holder: “My checkbook was stolen and the fraudster wrote out checks forging my signature.”
In this scenario, the Paying Bank is liable for the Maker’s Signature and is responsible for returning the check within 24 hours. If the Paying Bank misses the 24-hour deadline to return the check, they are accountable for the amount of the forged check. If the check was converted to an ACH transaction, the Paying Bank would follow NACHA Rules and Regulation E.
Having your National Check Professional (NCP) would help you in assisting your account holder in these scenarios.
SFE provides an NCP Preparation Program for payments professionals who will be taking the NCP exam. We've kicked off this year's program, but you have time to catch up if you would still like to join! Learn more about the NCP here. You can also take any of the NCP Prep courses individually, found on our Calendar of Events.