Tell us
what you think
Our Sponsors
 |
Our Sponsors
|
Question & Answer
Question: We sent a letter to a bank that had negotiated a check drawn on one of our accounts. The endorsement was forged. So we sent them the check and the affidavit of forgery. They sent it all back to us, telling us they were sorry, but they couldn't charge the check back to the account it was deposited into because the account was closed, so they were declining our claim! What do we do now?!
Answer: Sounds like you're dealing with a tough-stance bank!
Some of us have been around long enough to know that "PEG" no longer appears on the back of the check above the depository financial institution's endorsement stamp. During the discussion and changes wrought by the Expedited Funds Availability Act, it was decided that "PEG", which means Prior Endorsements Guaranteed, no longer had to appear in print as it was implied automatically with the stamped endorsement of the negotiating bank. It could be the bank you're dealing with really doesn't understand that by accepting the check for deposit, they guaranteed the endorsement. Guarantee means just that. Satisfaction or your money back!
The best you can do now is send them the original check and affidavit back again along with a letter that is also a little tougher. This time you'll probably want to quote Section 4-406 of the Uniform Commercial Code which deals with their guarantee of endorsement, explain it to them, and demand reimbursement. You may even want to inform them that if reimbursement is not forthcoming, you will be forced to take legal action - which is your next step, of course.
If they still won't pay up, now you'll have to make a judgement call. Is the amount of the check worth what it's going to cost you to sue?
Copyright © 1998 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 8, No. 7, 7/98
Rate This Article
Current Rating For the Feature:
| Total Ratings for this Feature: 0 |
|