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Question & Answer
Question: We (our Returns Department) returned a check, timely, for 'Missing Endorsement.' All that appeared on the back of the check was 'Deposit Only' (handwritten). The depository bank charged the check back to their customer. An overdraft situation arose and fees were generated. Their customer is billing us for these charges in the amount of $120 because he says we are the first bank to return any of his deposited checks for endorsement. He informed us he has endorsed "Deposit Only" for 10 years. Can you help? Thank you!
Answer: The customer's complaint is with his own bank, not with you. Your account holder, who wrote the check, has a right to proper endorsement. If the depository bank had wanted to honor their customer's "Deposit Only" endorsement, they could have stamped the check "Credited to the account of the within named payee: Absence of endorsement guaranteed"-which is the standard of the industry. This, of course, would have put the liability of proof of deposit on the depository bank. Perhaps they were unwilling to do that. In any case, any fees generated by the timely return of a check for proper endorsement are the responsibility of the depository bank and their customer-not you.
Copyright © 1994 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 4, No. 7, 1/94
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