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#757107 - 06/20/07 06:38 PM Check Fraud
BOT1 Offline
New Poster
Joined: Oct 2002
Posts: 23
Florida
We recently had somewhat of a new check fraud scheme. The suspects stole previously paid items (2004) from a business customer's storage area. The suspects then deposited those same checks,with no alteration whatsover, through another bank's ATM. The fraud suspects were given credit and withdrew the money. Our customer discovered the fraud 30 days later and reported the duplicate payment of these 2004 checks. The question is, can we (the paying bank) return these check to the depositing bank and if so what would be the reason for return? Thank you.

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Deposits and Payments
#757796 - 06/21/07 03:21 PM Re: Check Fraud BOT1
--houri-- Offline
Member
Joined: Sep 2006
Posts: 94
Los Angeles, CA
Are they IRD's or substitute checks?

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#758066 - 06/21/07 05:49 PM Re: Check Fraud --houri--
BOT1 Offline
New Poster
Joined: Oct 2002
Posts: 23
Florida
These are actual old checks that were stolen from the customer's files. They were from 2004 and had the processing stamps, etc. on the back. No alteration whatsoever.

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#759662 - 06/25/07 01:32 PM Re: Check Fraud BOT1
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
I sincerely hope you're closing out that account and opening a new one, because you have no idea how many of these old checks are out there.

Your customer did the right thing and called these items to your attention promptly. Obviously, your bank has correctly reimbursed the customer because the items were not properly payable the second time around.

Although the UCC has been amended to the point that you aren't responsible to your customer for paying a "stale" item, I don't think that absolves your bank if its responsibility for paying an item twice. I see nothing in the code that addresses how you could justify charging the items back to the depositary bank.

However, the realities of today's check processing environment put the depositary bank in a better position to have been able to catch these items in their ATM deposits than you were to catch them in your routine check processing unless you maintained paid check data for over three years.

The depositary bank could argue that it could not tell whether the items had been paid from the endorsements and other markings on those checks (unless your bank adheres to the old routine of marking items "PAID."

I think this is can politely be called a "standoff." The odds are you'd throw away more in legal fees than the checks are worth to try collecting from the depositary bank.
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#759749 - 06/25/07 02:39 PM Re: Check Fraud John Burnett
BOT1 Offline
New Poster
Joined: Oct 2002
Posts: 23
Florida
Thank you I completely agree with your assessment. We'll give it a go one time to return the checks and go from there. Thanks again.

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