QUESTION: After reading the question on forgery returns answered by Mary Beth Guard, it appears that this deals with forged maker's signature. Is this the same with counterfeit checks? I assume the liability on counterfeits also resides on
the drawer bank. However, in the case of forged endorsements, which are also being sent as without entry items (collections), it seems a little more complicated. Could you expand some to address these other issues?
ANSWER: A claim for forged endorsement can be made three years after the date of endorsement - which is the date of the endorsing bank's stamp on the back of the check. That stamp used to have the notation "PEG" which means Prior Endorsements Guaranteed. PEG no longer appears on most bank endorsement stamps because the UCC says if the bank stamp is back there, the guarantee is implied - it is not necessary to say so.
A forged endorsement check (original if available) should be sent back to the endorsing bank with an affidavit of forger signed by the payee on the check. It will almost always go back without entry - not thru the work. It is the liability of the negotiating (endorsing) bank.
Interesting to note that some banks,
particularly major financial institutions, are NOW refusing to entertain claims for less than $100 that are being returned for any reason - including encoding errors and forged endorsements. They'll let you know they will only handle such claims for a "$30 Research Fee" which they will deduct from your remittance. Of course, they say they will also not send you any claims under $100. The reasoning being that under the work load, any checks less than $100 just aren't worth the effort for adjustment. This thinking seems to be catching on.
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