Our customer notified us today that a check was paid twice from his account. The first time was 3/15/21 and the second was 5/25/21. The back of the check was endorsed with the payee's name only. The bank's spray indicates it was mobile deposit both times. Our software probably would have caught the duplicate but the second time it cleared it was encoded by the depositing bank with an incorrect check number. I know at this point it is too late to return the duplicate through the Fed. We are a very small shop and have never had this happen before, so how do we go about making a claim against the bank of first deposit?

You write a letter to the depositary bank and lay out the timeline of events, then state your claim for reimbursement. Part of me wants to suggest you target the first depositary bank, because it allowed the deposit to be made without the restrictive indorsement "For mobile deposit" wording, thus enabling the fraudulent or inadvertent second deposit. But I imagine you will want to go after the second bank based on simple argument that it presented the check for payment after it had already been paid once, and their mistake in encoding the item prevented your bank's timely detection of that fact.

If you're lucky, you will get paid. But I'd say the odds are against it. Unless there is a large amount involved, it may not be justified to escalate the matter to small claims court or other legal action.

Thank you for the information John. Both of the deposits were actually at the same bank. I'm guessing they would have caught it as a duplicate if not for their encoding error. Hopefully we can get it resolved. It isn't enough to pursue legal action, but definitely more than we want to lose.