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Question & Answer
Question: My customer just came in with a check drawn on his account that arrived in his statement. It's a different color, and a different number series, but the account number is his, and he says his signature is forged. It was charged against his account when it came in, and then we sent it to him in his statement. He says it isn't his, and he didn't write the check. What do I do now?
Answer: Unfortunately, what you have is a check that you "bought" by paying it over a forged maker's signature, and not returning it in a timely manner. You had until midnight of the day after you received the check in your shop to return it to the financial institution that sent it to you. Once you pass that deadline, you've paid the check.
You'll want to have your customer sign an affidavit of forged signature. (If you don't have one, call me-I'll send you a sample.) This affidavit says that not only did he or she not sign the check, but also did not receive any benefit from the proceeds. This little clause is important-sometimes there is negligence on the part of the customer in allowing a family member or friend to "use" checks. In that case, you may want to dispute the claim.
In the case you described, however, and from our conversation, this was a case of fraud. After your customer signs and delivers to you the affidavit and the original check, you will reimburse his account for the amount of the check. If payment of the check caused any overdrafts, you may have to cover the overdraft charges too-and possibly write letters of apology to any payees of "bounced" items caused by an overdraft due to the payment of the forged item. It can get detailed and messy!
Then you'll take a look at the back of the check and see what financial institution accepted the check for negotiation. Send them, without entry, a request for reimbursement and a copy of the front and back of the check. If they can help, and will agree to charge back the item, and they request the original-send it to them! Otherwise, somewhere down the line, you may want that original check. You bought it, remember. It now belongs to you.
More often, the negotiating financial institution will tell you, "Sorry, chum", and you'll wind up charging off the amount as a check fraud.
Don't forget your obligations under the guidelines of the Criminal Referral Form. This is a check fraud. If it is over $5000, even if you haven't a clue as to who perpetrated this fraud, it must be reported on a Criminal Referral Form.
If the negotiating financial institution can identify the payee/depositor, and the check is over $1000, it must be reported on a Criminal Referral Form. Watch your amounts and circumstances.
One thing you'll want to do as soon as your customer contacts you is close that account. Open a new one for your customer. Someone has that customer's number and has used it once. Don't assume they won't use it again!
Copyright © 1993 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 3, No. 10, 3/93
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