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Business Acct. Check Flagged as Duplicate (UCC)

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A check clears on a business account. The signature is good, it is within check number range and there are no red flags. Three days later another check clears, but it is flagged as duplicate. The client claims the first check is fraudulent. What is our recourse and obligation to the business, and is this different than a consumer account?

Without some contractual responsibility placed on the customer (for example, a positive pay file requirement), if the first check was fraudulent, you are on the hook for it, and the second check, if valid, is property payable. Your liability to your customer may be tempered if your customer is careless with checks or in some other way facilitated the fraud.

Your chance to return the first check as a forgery or counterfeit ended at midnight on the banking day following the date it was presented for payment.

First published on 05/06/2018

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