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Item Returned w/ Incorrect Return Reason Code

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Question: 
We have an item that was returned with the incorrect return reason code. It was returned as a forgery but should have been an endorsement. The item is payable to a business and endorsed by an individual. The payee claims to have not received the item in the mail. We received the item back as a late return claim. Can we return the item again for the correct return reason? What is the time frame for an improper endorsement?
Answer: 

To return the check through the Federal Reserve, you would have to return it by your midnight deadline (midnight the business day after the check is presented.) You are obviously past this timeframe since the bank of first deposit rejected the return as late.

Endorsement issues should be handled bank to bank "without entry" once you have obtained an affidavit of forged endorsement from the payee.

First published on 04/19/2020

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