Hello all,
There is a debate going on here...
The Hatfields say that if a customer writes "For Deposit Only" on the back of their check and puts their account number below that - it is properly endorsed.

The McCoys say that the above check needs to be either signed by the customer in addition to the "For Deposit Only" and the account number or we (the bank) need to stamp it with a "Credited to the account of the with named payee" stamp.

Any input would be appreciated. Thank you.

By definition, and endorsement includes the payees signature, so based on this, I agree with the McCoys.

However, the presentment warrenties of the UCC 4-208 state the bank of first deposit a warrenting to the drawee bank that the person who negotiated the check legal authorized to do so.
In English, you are stating that the payee received benefit for the check even if the check is not endorsed, so based on this, I agree with the Hatfields.

In other words, under the current UCC, it doesn't matter.

You would also need to consider the type of check that this endorsement is being used for. Most insurance checks and all U.S. Treasury require personal endorsements for example. Just writing "for deposit only" or using the credited to ...endorsement stamp will not work.

If the check is payable to "Junior Sample" and he writes "BR549" (his account number) on the back of the check, then the check has not been endorsed. The bank of first deposit simply guarantees the missing endorsement; i.e. it is your problem if the right Junior Sample did not receive the money or it did not go into his account. (You have the right and prudent banking practice would dictate that you require your customer to endorse the check properly.)

Whacking the back of the check with the "Credited to the account of..." stamp changes nothing. Your bank automatically guaranteed the missing endorsement and, assuming your state adopted the modern version of the UCC, you could have thrown that stamp away 15 - 18 years ago.

If, with or without the stamp, the drawee bank returns the check "endorsement missing," they are a little behind the times.

No one wins the debate as framed.

It is common that insurance checks require a personal endorsement by language they print in the endorsement area. U.S. Treasury checks do not and never did require a personal endorsement. If your bank requires it fine, but federal regulations do not.

Ken,

Could you sight the reference for not requiring a personal endorsement on a US Treasury check? This is something i have known but many people don't seem to agree with.

Thanks

Not Ken,

But you can almost never find a citation to prove that you don't need to do something a specific way. The proper questions is, can someone who believes this find a citation that says you must.

Section 240.13 of 31 CFR Part 240 addresses the Treasury Department's requirements for indorsements (as they spell it) on Treasury checks.

A credited account of named payee stamp is specifically listed as acceptable.

Thank you both