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#2227265 - 12/12/19 03:40 PM Fraudulent Checks-Commercial Account
mnbanker09 Offline
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Joined: Jan 2018
Posts: 123
Who is liable for forged checks (fraudulent items) against a commercial account, when the forgery has been discovered after the drawee bank's midnight return deadline? Forgery reported to the bank timely according to deposit agreement. Thanks in advance!

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#2227267 - 12/12/19 03:43 PM Re: Fraudulent Checks-Commercial Account mnbanker09
rlcarey Offline
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rlcarey
Joined: Jul 2001
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Galveston, TX
What was forged, the maker's signature, the entire check? Midnight deadline.
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#2227270 - 12/12/19 03:50 PM Re: Fraudulent Checks-Commercial Account rlcarey
mnbanker09 Offline
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Joined: Jan 2018
Posts: 123
The entire check was fictitious, maker's signature included.

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#2227500 - 12/16/19 09:13 PM Re: Fraudulent Checks-Commercial Account mnbanker09
HappyGilmore Offline
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Posts: 19,607
Pulling people out of the ditc...
the bank is liable, especially since you contend it was reported timely to the bank per your deposit agreement. Bank's choose to bypass reviewing signatures, assuming the risk for not checking.

you certainly can try and send a without entry claim to the BOFD, but they likely will tell you to pound sand, if they even bother replying.
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#2227555 - 12/17/19 05:04 PM Re: Fraudulent Checks-Commercial Account mnbanker09
John Burnett Offline
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John Burnett
Joined: Oct 2000
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Cape Cod
The only exceptions I am aware of to the above are
  • contributory negligence on the part of the customer (it would have to be bad to shift the loss to the customer);
  • use of a positive pay service requiring the customer to review and contact the bank by a deadline that allows the bank to make a timely return, and the customer missed that deadline; or
  • both the depositary and paying bank subscribe to a check fraud warranty (such as the one offered to ECCHO members) that may shift the loss to the depositary bank.
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