I read John B's guru comment about facsimile signatures. When we are advised of their use, we have customers sign a side agreement putting the onus on the company for unauthorized use of the stamp. However, sometimes customers don't advise us and suddenly they are using a stamped signature. In these cases we try to have them sign the agreement...but if we should not catch one of these stamp users and there is unauthorised use, is the bank to blame for processing the checks? I can't find a reg/UCC that says who is to blame in these scenarios... Thanks

We built this into the deposit agreement.

Facsimile Signatures. If your items are signed
with the use of any facsimile signature or other
non-manual form of signature, you
acknowledge that the use of such signature
is solely for your benefit and convenience.
You accept sole responsibility for maintaining
security over any device for affixing such
signature. Such signature will be effective as
your signature regardless of whether the
person affixing the signature was authorized
to do so. Owner agrees to indemnify and hold
us harmless from all losses resulting from our
honoring an item in any instance in which the
item bears or purports to bear a facsimile
signature resembling a facsimile signature on
file with us, regardless by whom or by what
means the actual or purported signature was
affixed to the item.

I posted an additional questions to your reply but I think I forgot to submit it. The text is perfect for going forward. In cases as I mentioned, where customer suddenly starts using the stamp and does not make it known to us, how are banks handling such misuse? They pay the checks, the customer doesn't check his/her statement for 4 months, then discovers an employee has used the stamp to make checks payable to him/herself. Where is our liability in such cases? You know banks are supposed to have those big pockets...can we rely on the "must check your statement in 60 days or else" reg? thanks

If you can document somehow that the same perp was using the stamp to defraud the company, I think the bank should consider using the "same wrongdoer" defense in 4-406(d)(2).

The time period, by the way, is 30 days for this.

The risk of using a facsimile signature falls on the customer, not the bank. Contract language is helpful in making the customer aware of that, but it is not essential in establishing the responsibility.

There is no argument that the signature is "forged" or "unauthorized." In the case where the customer has used the stamp and then wants to later complain of the stamp's fraudulent use then your position should be that the customer has already ratified the signature as being authorized and is in no position to say otherwise. Talk to your attorney...I would not reimburse the customer for anything under these circumstances.

I'm bringing this thread back to life, hoping to get some more help from BOL's Power Players.

In this day and age, so few checks are actually seen by human eyes as they go through processing, and it is not uncommon for customers to begin using facsimile signatures without our knowledge. I really like Andy's blurb above, but it still references "a facsimile signature on file with us". Do you think the verbage could be modified to remove this part? We'd like to have something in our deposit agreement to protect us, without getting a fascimile signature "agreement" signed.

We have such...

Facsimile Signatures. You may request us to permit the use of a facsimile signature device for the signing of checks, orders and instructions concerning your account by signing a separate authorization and indemnification agreement. Whether or not you have signed such an authorization or agreement, you agree that, if you authorize, use or permit the use of a facsimile signature device in connection with your account, we may honor and charge your account for any check, order or signed instruction that bears or purports to bear the facsimile signature of you or any account signatory if it resembles
any facsimile signature that you authorized, used or permitted, or if it resembles any actual signature or specimen facsimile signature that you have provided us, regardless of by whom or by what means the actual or purported facsimile signature may have been made or affixed, and even if it was made or affixed by an unauthorized person or with a counterfeit facsimile device. You acknowledge that the use of a facsimile device is for your own convenience and benefit, and assume full responsibility for maintaining the security of your facsimile devices and all risks of any unauthorized use of your facsimile device and any use of a counterfeit facsimile device.

Again, the risk of using a facsimile signature falls on the customer, not the bank. Contract language is helpful in making the customer aware of that, but it should be written as a disclosure, not an attempt to shift responsibility. Having the customer sign an agreement is just an attempt to make it even more clear and the agreement need not be mentioned in the contract at all.

Thank you both!