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Question & Answer
Question: We had a customer come in in June, 1997, and tell us that two checks had been forged on his account with us-one in December, 1996, and one in March, 1996. Both had his name as maker forged, he says, by his wife-who was the payee on both checks. What is our liability? Do we have to reimburse him for forged signature?
Answer: Let's start with the liability. You may assume liability for the check paid last December. It's less than a year ago, and your customer can make a claim on a forged signature for a year. But even with a stretch, the one in March is out of the ballpark. Your contract (at worst) follows UCC parameters of liability for forged signature being the "first statement in which a forgery appears and 30 days after that statement is made available." He should have told you a lot sooner about the December forgery, which would have eliminated the possibility of the March one. So, even basically, you're looking at just the December check.
HOWEVER…A whole bunch of questions immediately come to mind. How did his wife get the checks? Were they living with each other at the time? Did she pay household expenses with the checks? (If so, how can he sign an affidavit that he "did not benefit" from the proceeds?) Why did he wait so long to tell you about the forgeries? Has he filed a police report?
I'm finding that financial institutions are starting to follow the advice that knowledgeable banking lawyers have been giving out for awhile. Don't be so quick to pay claims! Do some investigating and ask some questions. The very last thing you want to do is reimburse!
Note from editor: After our conversation, this security officer went back and started asking some questions. His customer then said, "Just forget the whole thing." The security officer was glad to do so.
Copyright © 1997 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 7, No. 9, 8/97
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