Are We Responsible for "Buyer's Remorse"?

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Question:

I have a member that came in to to fill out an affidavit of forgery on a check that came through her account as pre-authorized signature. She clearly stated on the affidavit that she did authorize the check, but she now found out that this company is a scam. Member did come in within the 30 days from her statement to dispute. But do we have to honor her affidavit when she was at fault for giving out her account number to a company before researching the company?

Answer:

No, you are not responsible for your member's lapse in judgment. Because she said she had authorized the transaction, you can hold her accountable for the authorization, unless you have some sort of membership agreement that protects your members from such lapses.

For whatever it's worth, if the transaction had NOT been authorized by your member, the appropriate affidavit to be completed would NOT be a forgery affidavit, but one claiming non-authorization. It's a small point, but it could be important. Depending upon where your credit union and the bank of first deposit are located, unauthorized drafts such as the one you've described might be returned under transfer and presentment warranties in the UCC. You'd need familiarity with the versions of the UCC in effect in your state and in the state where the "check" was deposited.

First published on BankersOnline.com 2/7/05