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Fraudulent Cashier's Check- Late Return

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We received a call from a credit union on 9-1-21 informing us that a cashier's check on them was fraudulent. We sent that check out on 8-5-21. We waited 10 business days to give the customer credit. (8-20-21) The customer has spent more than half the funds but I placed a hold on the remaining amount. Do credit unions not return through the Fed like banks? They sent us an Indemnification Agreement to sign and send the funds back. Could this be considered a Late Return? Help!

Credit Unions are governed under Regulation CC and the UCC like any other depository institution, This is a late return, hence the indemnification agreement. Sounds like they know they are late and they are trying to recoup their loss if possible. You are under no obligation to do anything, but most banks would return any remaining funds, if there are still funds in the account. Talk to your legal counsel.

First published on 10/10/2021

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