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Bank Liable on Forged Signature Claim from Jan 05

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We have a customer who is claiming a forged signature on her account from January 2005. Are we liable for that far back? What happens if when we look at the checks, we think the signature is accurate, but the customer doesn't? Who wins and what are our obligations then?

Where has your customer been in the more than two years since the alleged forgery? Hiding under what rock?

Dig out a copy of your state's version of the Uniform Commercial Code. Jump to the section titled "CUSTOMER'S DUTY TO DISCOVER AND REPORT UNAUTHORIZED SIGNATURE OR ALTERATION" (in most states, that's section 4-406). Scan down to subsection (f), where you're likely to read "Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year after the statement or items are made available to the customer (subsection (a)) discover and report the customer's unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration."

Unless your bank has an overwhelming urge to make this customer whole regardless of the law, you are under no obligation to do so. The window of opportunity slammed shut on your customer in January 2006, and you need not open it.

First published on 2/25/08

First published on 02/25/2008

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