Question:
A customer notified the bank of forgery on checks drawn on our bank. These were counterfeit checks with a forged signature which were cashed by our tellers. The tellers exercised ordinary care: verified the signature card, obtained proper ID and a thumbprint. But these counterfeit checks were too good and almost identical to the real thing. The customer notified us within the correct time; therefore, we refunded the money. A state police officer said that the bank is not the victim; the customer is the victim, so we didn't have to refund their money. The customer is victim of check fraud, not us. I realized that the police officer may not know of banking regulations, but is there any truth to this? I thought, per the UCC, that the Bank is liable for this. We cashed the checks and they had a forged signature; therefore, we take the loss.