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Question: A Return Items Officer in Iowa asks: "We just got a check back through the work that was deposited in our institution almost six months ago. It was marked 'forged signature'. Do we have to give the money back for this check? Isn't this covered under law somewhere?"

Answer: Sure is. Uniform Commercial Code 4:406 covers forged signatures-and what you will learn there will tell you that the drawee institution can send you the item without entry and request their money, but they are ultimately responsible for the funds, as their customer is the one whose signature was forged. It is their responsibility to check that signature. And Reg. J covers the return of the item itself. The drawee institution has until midnight of the day following their receipt of the check to send it back to you in the work. After that, any return has to be done without entry-in other words, with no direct charge to you. Six months after it was received means you have a late return, and you should contact Fed and send the check back through them with a late return form. Check with your contact at the Federal Reserve Bank for specific instructions.

Copyright © 1991 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 2, No. 1, 1/91

First published on 01/01/1991

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