How is eveyone else handling these types of fraud claims when made by the client? My bank has had numerous compliants regarding the handling of these claims. We typically do not provide the client with provisional credit at that time. We send the depositing bank a collection letter along with the affidavit and certified check copy where the process can take up to 90 days to receive a response. Our disclosure does not address timeframes and I was not able to locate a Reg regarding timeframes either. Is the 90 day turnaround time industry standard? Please help.

I think you have a couple of questions going on, so hopefully I address them properly.
Provisional credit for check claims-no, we provide none.Never heard of an industry standard & I've been doing this 20 yrs. Have had too many times the depositing bank came with a denial reason.

Ditto Midwest.

The claims are handled according to your state's version of the Uniform Commercial Code. In the model form, there is no prescribed time limt for honoring a claim. Consequently, the bank against which you have a claim does not have a time limit, either. If your customer feels the claim is taking too long, or if you feel that the BOFD is taking too long. Either of you would have the right to file suit for breach of warranty under the UCC. Knowing how fast the court system moves, and how expensive it could be over a dollar amount that may only be in the hundreds, it's usually a better idea to just wait it out.

If the other bank refuses to honor the claim, and we file suit for breach of warranty, at what point are we actually required to give the customer back the money? We had a case like this recently and our attorney advised us that either way we had to give the customer back the money so we dropped the suit after $3,000 worth of legal fees. We tried to charge the customer for the fees - didn't work.

The UCC is silent on when you are required to credit the customer. If the customer decided that you're taking too long to honor their claim, they may opt to file suit against you. The customer has a claim against you, and you have a claim against the BOFD. Collecting on those claims is another matter.

We never give provisional credit for forged endorsement claims - sometimes the payee DID get the money.

Provisional credit for forged sig/counterfeit check? they are decided on a case by case basis depending upon age of the item, amount, circumstances, etc.