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Affidavit of Forged Endorsement Claim (LNB

Question: 
Our business customer (#1) wrote a check to another business (#2) for services rendered. #2 claims that they never received the funds and #1 filed an affidavit of forged endorsement with us. The claim was sent to a large nationwide bank (LNB) where the check was negotiated, in a town located in the same state as #2. The account was opened at LNB using the same established address as #2. We don't know when or if this particular check was part of opening funds. LNB denied our claim due to the established account using #2's business identity. Evidence from LNB indicates the account was overdrawn at some point and then closed by LNB. Do we have the right to then chargeback the funds to our Customer #1; or is LNB required to refund the funds to our bank, based on the claim of forged endorsement by our customer #1?
Answer: 

by Randy Carey

Any claim of forged endorsement would have to be filed by business #2 and not your customer. This now sounds like a civil manner between business #1 and #2.

Answer: 

by John Burnett

Basic rule: If you need an affidavit of a forgery, you must obtain it from the party claiming their signature was forged. You customer cannot possible know whether the payee's indorsement was forged. That's something only the payee can attest to.

so --

If the forgery is of the check issuer's signature, the check issuer provides the affidavit

If the forgery is of the payee's signature, the payee provides the affidavit.

First published on 10/24/2021

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