There was a time when banks had the time and people (and low enough check volume) to examine on-us checks before they were paid, actually comparing signatures against signature cards. I worked in such a bank back in the 1960s. We didn't have checking account numbers, and more than half our non-business checking account customers didn't have their names pre-printed on their checks. We literally posted and paid based on signatures. It's been the law since the 1700s (based on a British court case, Price vs. Neal) that a bank is charged with recognizing its depositor's signature, and that premise hasn't changed in spite of the technological change and huge volumes that banks are handling today. So if the check is counterfeit or the drawer's signature a forgery, the drawee bank is responsible to see that and make a timely return, or become accountable for the check. What has changed is that the UCC has had some tweaks added that give the bank some occasional relief when it comes down to trying to shift some of the loss to its own customer if the bank can prove the customer facilitated the forgery (leaving the business checkbook accessible to unauthorized access, etc.).
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8