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#2221779 - 09/17/19 08:57 PM Holding Fraudulent Funds
WDCA Offline
Member
Joined: Nov 2015
Posts: 76
A fraud ring stole checks, altered them, and convinced our customer to let them deposit the check into their account at our atm. They took the funds available immediately but we held the rest. The check cleared the account it was fraudulently written from and we identified the check as fraud since we seen others. We called the other bank and they didn't seem to want to get too involved since their customer hasn't complained yet. (they are not reaching out to their customer).

Now, we are holding the funds and don't know what to do with them. Do we give it to our customer who allowed the fraudulent check or do we hold in suspense and wait for the other bank to call? There could be no wrongful dishonor issue, right? Our customer admitted to giving debit/pin to fraudster.

Thanks

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#2222062 - 09/21/19 03:24 PM Re: Holding Fraudulent Funds WDCA
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,960
Galveston, TX
You need to consult legal counsel, but I don't think you can just hold on to the money. When you say altered checks, what was altered and should you have know at the time of deposit and you are sure the bank has no liability? If so:

The depositor should be given access to the money and also let them know that they probably need to engage their own legal counsel. As if they spend the money, then they may become liable for unjust enrichment, if they fully know the funds were obtained through a fraudulent means.

They need to work that out with their own legal counsel. The bank is neither judge or jury in this case.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2222067 - 09/23/19 12:33 PM Re: Holding Fraudulent Funds WDCA
WDCA Offline
Member
Joined: Nov 2015
Posts: 76
Thanks for responding. We knew as soon as we had the check in hand that it was fraud. It was originally deposited at atm so we did accept it in the sense that we gave immediate availability of some of the funds. However, we froze the funds before we gave any further credit. I was thinking we would send the funds to the state if the other bank fails to collect on it.

Probably another legal question, but can we refuse a check that was deposited at an atm? Would we then mail the fraudulent check back to our customer who deposited it? I understand we are not judge and jury but I feel we are knowingly enabling a fraud if we give the money to the customer who already confessed (to us) that they knew it was fraudulent.

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#2222081 - 09/23/19 02:44 PM Re: Holding Fraudulent Funds WDCA
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,960
Galveston, TX
Of course you can refuse a deposit. Even if it is placed in the ATM it has not yet been deposited unless you have already forwarded it for collection, regardless of your availability policy.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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